Hand  Book 

OF  THE 

War  Revenue  Act 


of  1918 


1 

I 


Approved,  February  24,  1919 


r 


Copyright  1919  by  National  Bank  News.  Philadelphia. 


. 3 C#U-.|<?  “2kl<« 


* 

4 


CONTENTS 


TITLE  I — General  Definitions  5 

TITLE  II — Income  Tax  ^ 

On  net  income  received  during  calendar  year  1918  and  thereafter,  payable 
by  individuals  and  corporations. 

TITLE  III — War-Profits  and  Excess-Profits  Tax  33 

On  income  for  taxable  year  1918  and  thereafter,  payable  by  corporations. 

TITLE  IV — Estate  Tax  

On  transfer  of  the  net  estate  of  decedents  dying  after  passage  of  this  Act. 

TITLE  V Tax  on  Transportation  and  Other  Facilities,  and  on  Insurance.  ...  46 
Effective  April  1,  1919. 


TITLE  VI — Tax  on  Beverages  

Effective  immediately  and  payable  by  manufacturer,  producer  or  importer; 
with  the  exception  of  tax  on  soft  drinks,  ice  cream,  etc.,  sold  at  soda  foun- 
tains or  ice  cream  parlors,  which  is  effective  May  1,  1919. 

TITLE  VII — Tax  on  Cigars,  Tobacco  and  Manufactures  Thereof 
Effective  immediatel}*.  Payable  by  manufacturer  or  importer. 

TITLE  VIII — Tax  on  Admissions  and  Dues  

Effective  April  1,  1919. 


TITLE  IX — Excise  Taxes  

Effective  immediately  covering  taxes  specified  in  Paragraphs  456-483.  Tax 
on  Jewelry  effective  April  1,  1919,  and  taxes  enumerated  in  Paragraphs 
484-506,  510-514  are  effective  May  1,  1919. 

TITLE  X — Special  Taxes  

Capital  stock  tax  on  corporations  effective  July  1,  1918,  and  other  Special 
Taxes  effective  January  1,  1919,  with  the  exception  of  tax  on  users  of 
yachts  and  boats,  which  is  effective  60  days  after  passage  of  Act. 

TITLE  XI — Stamp  Taxes  

Effective  April  1,  1919. 


TITLE  XII— Tax  on  Employment  of  Child  Labor 
TITLE  XIII — General  Administrative  Provisions 


*TTTLE  XIV — General  Provisions 
ALPHABETICAL  INDEX 


80 

82 

90 

93 


Note: — Herein  is  given  the  complete  text  of  the 
Revenue  Act  of  1918  as  passed  by  Congress  February, 
1919.  The  paragraphs  have  been  numbered  and  given 
appropriate  headings  for  quick  reference  purposes.  Wher- 
ever certain  sections  or  portions  of  the  Act  are  referred 
to,  printed  in  italics  and  enclosed  in  brackets  immediately 
thereafter  will  be  found  the  paragraph  numbers  of  this  book. 

This  Act  incorporates  nearly  all  the  provisions  of  the 
Revenue  Acts  of  1916  and  1917,  with  numerous  changes 
and  increases  in  rates.  In  the  footnotes  will  be  found 
the  rates  of  taxes  in  effect  under  these  laws. 

An  exhaustive  alphabetical  index  is  printed  in  the 
back  of  the  book  and  all  the  references  are  to  the  para- 
graph numbers. 


Revenue  Act  of  1918 

An  Act:  To  provide  revenue , and  for  other  purposes. 


TITLE  I.— GENERAL  DEFINITIONS. 


Section  1.  That  when  used  in  this  Act — 


1. 

“Person.” 

2. 

“Corporation.” 

3. 

“Domestic.” 

4. 

“Foreign.” 

5. 

“United  States.” 

6. 

“Secretary.” 

7. 

“Commissioner.” 


The  term  “person”  includes  partnerships  and  corporations, 
as  well  as  individuals ; 

The  term  “corporation”  includes  associations,  joint-stock 
companies,  and  insurance  companies; 

The  term  “domestic”  when  applied  to  a corporation  or 
partnership  means  created  or  organized  in  the  United  States ; 

The  term  “foreign”  when  applied  to  a corporation  or 
partnership  means  created  or  organized  outside  the  United 
States ; 

The  term  “United  States”  when  used  in  a geographical 
sense  includes  only  the  States,  the  Territories  of  Alaska  and 
Hawaii,  and  the  District  of  Columbia; 

The  term  “Secretary”  means  the  Secretary  of  the 
Treasury; 

The  term  “Commissioner”  means  the  Commissioner  of 
Internal  Revenue; 


8. 

“Collector.” 


The  term  “collector”  means  collector  of  internal 
revenue ; 


9. 

“Revenue  Act  of 
1916.” 


The  term  “Revenue  Act  of  1916”  means  the  Act  entitled 
“An  Act  to  increase  the  revenue,  and  for  other  purposes,” 
approved  September  8,  1916; 


10. 

“Revenue  Act  of 
1917.” 

11. 

“Taxpayer.” 


The  term  “Revenue  Act  of  1917”  means  the  Act  entitled 
“An  Act  to  provide  revenue  to  defray  war  expenses,  and  for 
other  purposes,”  approved  October  3,  1917 ; 

The  term  “taxpayer”  includes  any  person,  trust  or  estate 
subject  to  a tax  imposed  by  this  Act; 


The  term  “Government  contract”  means  (a)  a contract 
made  with  the  United  States,  or  with  any  department,  bureau, 
officer,  commission,  board,  or  agency,  under  the  United  States 
and  acting  in  its  behalf,  or  with  any  agency  controlled  by  any 
of  the  above  if  the  contract  is  for  the  benefit  of  the  United  States,  or  (b)  a sub- 
contract made  with  a contractor  performing  such  a contract  if  the  products  or  services 
to  be  furnished  under  the  subcontract  are  for  the  benefit  of  the  United  States.  The 
term  “Government  Contract  or  contracts  made  between  April  6,  1917,  and  November 
11,  1918,  both  dates  inclusive”  when  applied  to  a contract  of  the  kind  referred  to  in 
clause  (a)  of  this  paragraph,  includes  all  such  contracts  which,  although  entered  into 
during  such  period,  were  originally  not  enforceable,  but  which  have  been  or  may 
become  enforceable  by  reason  of  subsequent  validation  in  pursuance  of  law; 


12. 

“Government  con- 
tract.” 


13. 

“Military  or  naval 
forces  of  U.  S.” 

within  such  term ; 


The  term  “military  or  naval  forces  of  the  United  States” 
includes  the  Marine  Corps,  the  Coast  Guard,  the  Army  Nurse 
Corps,  Female,  and  the  Navy  Nurse  Corps,  Female,  but  this 
shall  not  be  deemed  to  exclude  other  units  otherwise  included 


14. 

“Present  War.” 


The  term  “present  war”  means  the  war  in  which  the 
United  States  is  now  engaged  against  the  German  Government. 


15.  For  the  purposes  of  this  Act  the  date  of  the  termination  of  the  present  war 
shall  be  fixed  by  proclamation  of  the  President. 


5 


TITLE  II.— INCOME  TAX. 


PART  I.— GENERAL  PROVISIONS 


Definitions 


Sec.  200.  That  when  used  in  this  title — 

The  term  “taxable  year”  means  the  calendar  year,  or  the 
16.  fiscal  year  ending  during  such  calendar  year,  upon  the  basis 

“Taxable  Year,”  of  which  the  net  income  is  computed  under  Section  212  ( par . 
“Fiscal  Year,”  “First  45-47)  or  Section  232  (par.  143).  The  term  “fiscal  year” 
Taxable  Year.”  means  an  accounting  period  of  twelve  months  ending  on  the 

last  day  of  any  month  other  than  December.  The  first  taxable 
year,  to  be  called  the  taxable  year  1918,  shall  be  the  calendar  year  1918  or  any  fiscal 
year  ending  during  the  calendar  year  1918; 


17. 

“Fiduciary.” 


18. 

“Withholding 

Agent.” 


The  term  “fiduciary”  means  a guardian,  trustee,  executor, 
administrator,  receiver,  conservator,  or  any  person  acting  in 
any  fiduciary  capacity  for  any  person,  trust  or  estate ; 

The  term  “withholding  agent”  means  any  person  required 
to  deduct  and  withhold  any  tax  under  the  provisions  of  Sec- 
tion 221  (par.  102-106)  or  Section  237  (par.  169)  ; 


19. 


The  term  “personal  service  corporation”  means  a corpora- 
“Personal  Service  .whose  income  is  to  be  ascribed  primarily  to  the 

corporation  ” activities  of  the  principal  owners  or  stockholders  who  are 

• ' . themselves  regularly  engaged  in  the  active  conduct  of  the 

affairs  of  the  corporation  and  in  which  capital  (whether  invested  or  borrowed)  is 
not  a material  income-producing  factor ; but  does  not  include  any  foreign  corporation, 
nor  any  corporation  50  per  centum  or  more  of  whose  gross  income  consists  either 
(1)  of  gains,  profits,  or  income  derived  from  trading  as  a principal,  or  (2)  of  gains, 
profits,  commissions,  or  other  income,  derived  from  a Government  contract  or  con- 
tracts made  between  April  6,  1917,  and  November  11,  1918,  both  dates  inclusive; 


The  term  “paid,”  for  the  purposes  of  the  deductions  and 
credits  under  this  title,  means  “paid  or  accrued”  or  “paid  or 
incurred,”  and  the  terms  “paid  or  incurred”  and  “paid  or 
accrued”  shall  be  construed  according  to  the  method  of  ac- 
counting upon  the  basis  of  which  the  net  income  is  computed 
under  Section  212  (par.  45-47). 


20. 

“Paid,”  “Paid  or 
incurred”  and  “Paid 
or  accrued.” 


Dividends 


21.  Sec.  201.  (a)  That  the  term  “dividend”  when  used  in 

Meaning  of  term.  this  title  (except  in  paragraph  (10)  of  Subdivision  (a)  of 
Section  234  (par.  158)  means  (1)  any  distribution  made  by  a 
corporation,  other  than  a personal  service  corporation,  to  its  shareholders  or  members, 
whether  in  cash  or  in  other  property  or  in  stock  of  the  corporation,  out  of  its  earn- 
ings or  profits  accumulated  since  February  28,  1913,  or  (2)  any  such  distribution 
made  by  a personal  service  corporation  out  of  its  earnings  or  profits  accumulated 
since  February  28,  1913,  and  prior  to  January  1,  1918. 


(b)  Any  distribution  shall  be  deemed  to  have  been  made 
from  earnings  or  profits  unless  all  earnings  and  profits  have 
first  been  distributed.  Any  distribution  made  in  the  year  1918 
or  any  year  thereafter  shall  be  deemed  to  have  been  made 
from  earnings  or  profits  accumulated  since  February  28,  1913, 
or,  in  the  case  of  a personal  service  corporation,  from  the  most  recently  accumulated 
earnings  or  profits ; but  any  earnings  or  profits  accumulated  prior  to  March  1,  1913, 
may  be  distributed  in  stock  dividends  or  otherwise,  exempt  from  the  tax,  after  the 
earnings  and  profits  accumulated  since  February  28,  1913,  have  been  distributed. 


22. 

When  distribution 
deemed  made  from 
earnings  or  profits. 


23. 

Stock  Dividends. 
Amounts  distributed 
in  liquidation. 


(c)  A dividend  paid  in  stock  of  the  corporation  shall 
be  considered  income  to  the  amount  of  the  earnings  or  profits 
distributed.  Amounts  distributed  in  the  liquidation  of  a cor- 
poration shall  be  treated  as  payments  in  exchange  for  stock 
or  shares,  and  any  gain  or  profit  realized  thereby  shall  be 


taxed  to  the  distributee  as  other  gains  or  profits. 


6 


24.  (d)  If  any  stock  dividend  (1)  is  received  by  a taxpayer 

Specified  stock  between  January  1 and  November  1,  1918,  both  dates  in- 
dividends  taxed  a t elusive,  or  (2)  is  during-  such  period  bona  fide  authorized  or 
rates  when  accumu-  declared,  and  entered  on  the  books  of  the  corporation,  and  is 
lated.  received  by  a taxpayer  after  November  1,  1918,  and  before 

the  expiration  of  thirty  days  after  the  passage  of  this  act,  then 
such  dividend  shall,  in  the  manner  provided  in  section  206,  (par.  39)  be  taxed  to 
the  recipient  at  the  rates  prescribed  by  law  for  the  years  in  which  the  corporation 
accumulated  the  earnings  or  profits  from  which  such  dividend  was  paid,  but  the 
dividend  shall  be  deemed  to  have  been  paid  from  the  most  recently  accumulated  earn- 
ings or  profits. 


25. 


How  assignable. 


(e)  Any  distribution  made  during  the  first  sixty  days  of 
any  taxable  year  shall  be  deemed  to  have  been  made  from 
earnings  or  profits  accumulated  during  preceding  taxable 
years ; but  any  distribution  made  during  the  remainder  of  the  taxable  year  shall  be 
deemed  to  have  been  made  from  earnings  or  profits  accumulated  between  the  close 
of  the  preceding  taxable  year  and  the  date  of  distribution,  to  the  extent  of  such 
earnings  or  profits,  and  if  the  books  of  the  corporation  do  not  show  the  amount  of 
such  earnings  or  profits,  the  earnings  or  profits  for  the  accounting  period  within 
which  the  distribution  was  made  shall  be  deemed  to  have  been  accumulated  ratably 
during  such  period. 


Basis  for  Determining  Gain  or  Loss 

26.  Sec.  202  (a)  That  for  the  purpose  of  ascertaining  the  gain  derived  or  loss 
sustained  from  the  sale  or  other  disposition  of  property,  real,  personal,  or  mixed,  the 
basis  shall  be — 


(1)  In  the  case  of  property  acquired  before  March  1, 
1913,  the  fair  market  price  or  value  of  such  property  as  of 
that  date;  and 

(2)  In  the  case  of  property  acquired  on  or  after  that 
date,  the  cost  thereof ; or  the  inventory  value,  if  the  inventory 
is  made  in  accordance  with  Section  203  (par.  31). 

(b)  When  property  is  exchanged  for  other  property,  the 
property  received  in  exchange  shall  for  the  purpose  of  de- 
termining gain  or  loss  be  treated  as  the  equivalent  of  cash  to 
the  amount  of  its  fair  market  value,  if  any ; but  when  in  con- 
nection with  the  reorganization,  merger,  or  consolidation  of 
a corporation  a person  receives  in  place  of  stock  or  securities 
owned  by  him  new  stock  or  securities  of  no  greater  aggregate 
par  or  face  value,  no  gain  or  loss  shall  be  deemed  to  occur 
from  the  exchange,  and  the  new  stock  or  securities  received 
shall  be  treated  as  taking  the  place  of  the  stock,  securities, 
or  property  exchanged. 

When  in  the  case  of  any  such  reorganization,  merger  or 
consolidation  the  aggregate  par  or  face  value  of  the  new  stock 
or  securities  received  is  in  excess  of  the  aggregate  par  or 
face  value  of  the  stock  or  securities  exchanged,  a like  amount 
in  par  or  face  value  of  the  new  stock  or  securities  received 
shall  be  treated  as  taking  the  place  of  the  stock  or  securities 
exchanged,  and  the  amount  of  the  excess  in  par  or  face  value  shall  be  treated  as  a 
gain  to  the  extent  that  the  fair  market  value  of  the  new  stock  or  securities  is  greater 
than  the  cost  (or  if  acquired  prior  to  March  1,  1913,  the  fair  market  value  as  of 
that  date)  of  the  stock  or  securities  exchanged. 

Inventories 

31.  Sec.  203.  That  whenever  in  the  opinion  of  the  Commissioner  the  use  of 
inventories  is  necessary  in  order  clearly  to  determine  the  income  of  any  taxpayer, 
inventories  shall  be  taken  by  such  taxpayer  upon  such  basis  as  the  Commissioner,  with 
the  approval  of  the  Secretary,  may  prescribe  as  conforming  as  nearly  as  may  be  to 
the  best  accounting  practice  in  the  trade  or  business  and  as  most  clearly  reflecting 
the  income. 


27. 

Property  acquired 
before  3-1-13. 

28. 

Acquired  3-1-13  or 
later. 

29. 

Property  ex- 
changed. 


In  case  of  reorgan- 
ization, merger  o r 
consolidation  of  a 
corporation. 


30. 

In  case  of  excess 
in  par  value  of  new 
securities  over  those 
exchanged. 


7 


Net  Losses 


32. 

Definition. 


Sec.  204.  (a)  That  as  used  in  this  section  the  term  “net 
loss”  refers  only  to  net  losses  resulting  from  either  (1)  the 
operation  of  any  business  regularly  carried  on  by  the  taxpayer, 
or  (2)  the  bona  fide  sale  by  the  taxpayer  of  plant,  buildings,  machinery,  equipment 
or  other  facilities,  constructed,  installed  or  acquired  by  the  taxpayer  on  or  after 
April  6,  1917,  for  the  production  of  articles  contributing  to  the  prosecution  of  the 
present  war ; and  when  so  resulting  means  the  excess  of  the  deductions  allowed  by 
law  (excluding  in  the  case  of  corporations  amounts  allowed  as  a deduction  under 
paragraph  (6)  of  subdivision  (a)  of  Section  234  (par.  154 ) over  the  sum  of  the  gross 
income  plus  any  interest  received  free  from  taxation  both  under  this  title  and  under 
Title  III  (par.  211-286). 


,3  (b)  If  for  any  taxable  year  beginning  after  October  31, 

Sustained  in  tax-  ^18,  and  ending  prior  to  January  1,  1920,  it  appears  upon  the 
able  vear  beeinnine  production  of  evidence  satisfactory  to  the  Commissioner  that 
after  10-31-18  and  any  taxPayer  ^as  sustained  a net  loss,  the  amount  of  such  net 
1 -j  loss  shall  under  regulations  prescribed  by  the  Commissioner 
ending  prior  to  1-1-^u.  ^ith  the  approval  of  the  Secretary  be  deducted  from  the  net 

income  of  the  taxpayer  for  the  preceding  taxable  year;  and 
the  taxes  imposed  by  this  title  and  by  Title  III  (par.  211-286)  for  such  preceding 
taxable  year  shall  be  redetermined  accordingly.  Any  amount  found  to  be  due  to  the 
taxpayer  upon  the  basis  of  such  redetermination  shall  be  credited  or  refunded  to 
the  taxpayer  in  accordance  with  the  provisions  of  Section  252  (par.  195).  If  such  net 
loss  is  in  excess  of  the  net  income  for  such  preceding  taxable  year,  the  amount  of 
such  excess  shall  under  regulations  prescribed  by  the  Commissioner  with  the  approval 
of  the  Secretary  be  allowed  as  a deduction  in  computing  the  net  income  for  the 
succeeding  taxable  year. 

34.  (c)  The  benefit  of  this  section  (par.  32-33)  shall  be  allowed  to  the  members 

of  a partnership  and  the  beneficiaries  of  an  estate  or  trust  under  regulations  prescribed 
by  the  Commissioner  with  the  approval  of  the  Secretary. 


Fiscal  Year  with  Different  Rates 


35.  Sec.  205.  (a)  That  if  a taxpayer  makes  return  for  a 

Taxes  for  fiscal  fiscal  year  beginning  in  1917  and  ending  in  1918,  his  tax 
year  (1917-1918).  under  this  title  for  the  first  taxable  year  shall  be  the  sum  of : 

(1)  the  same  proportion  of  a tax  for  the  entire  period  com- 
puted under  Title  I of  the  Revenue  Act  of  1916  as  amended  by  the  Revenue  Act  of 

1917  and  under  Title  I of  the  Revenue  Act  of  1917,  which  the  portion  of  such  period 
falling  within  the  calendar  year  1917  is  of  the  entire  period,  and  (2)  the  same  pro- 
portion of  a tax  for  the  entire  period  computed  under  this  title  at  the  rates  for  the 
calendar  year  1918  which  the  portion  of  such  period  falling  within  the  calendar  year 

1918  is  of  the  entire  period : Provided,  that  in  the  case  of  a personal  service  corporation 
the  amount  to  be  paid  shall  be  only  that  specified  in  clause  (1). 


36. 

Taxes  paid  under 
Acts  of  1916  and  1917 
credited  or  refunded. 


Any  amount  heretofore  or  hereafter  paid  on  account  of  the 
tax  imposed  for  such  fiscal  year  by  Title  I of  the  Revenue 
Act  of  1916  as  amended  by  the  Revenue  Act  of  1917,  and  by 
Title  I of  the  Revenue  Act  of  1917,  shall  be  credited  towards 
the  payment  of  the  tax  imposed  for  such  fiscal  year  by  this 
Act,  and  if  the  amount  so  paid  exceeds  the  amount  of  such  tax  imposed  by  this  act, 
or,  in  the  case  of  a personal  service  corporation,  the  amount  specified  in  clause  (1), 
the  excess  shall  be  credited  or  refunded  in  accordance  with  the  provisions  of  Section 
252  (par.  195). 


37. 


(b)  If  a taxpayer  makes  a return  for  a fiscal  year  be- 
1 ginning  in  1918  and  ending  in  1919,  the  tax  under  this  title 
1 axes  1 o r nscai  £or  gucj1  bscaj  year  shall  be  the  sum  of:  (1)  the  same  pro- 
year yiB-iyiy;.  portion  of  a tax  for  the  entire  period  computed  under  this 

title  at  the  rates  specified  for  the  calendar  year  1918  which  the  portion  of  such  period 
falling  within  the  calendar  year  1918  is  of  the  entire  period,  and  (2)  the  same  pro- 
portion of  a tax  for  the  entire  period  computed  under  this  title  at  the  rates  specified 
for  the  calendar  year  1919  which  the  portion  of  such  period  falling  within  the  calendar 
year  1919  is  of  the  entire  period. 


8 


38.  (c)  If  a fiscal  year  of  a partnership  begins  in  1917  and 
Partnership  taxes  ends  in  1918  or  begins  in  1918  and  ends  in  1919,  then  notwith- 

for  fiscal  year.  standing  the  provisions  of  subdivision  (b)  of  Section  218 

{par.  8g ),  (1)  the  rates  for  the  calendar  year  during  which 
such  fiscal  year  begins  shall  apply  to  an  amount  of  each  partner’s  share  of  such  part- 
nership net  income  (determined  under  the  law  applicable  to  such  year)  equal  to  the 
proportion  which  the  part  of  such  fiscal  year  falling  within  such  calendar  year  bears 
to  the  full  fiscal  year,  and  (2)  the  rates  for  the  calendar  year  during  which  such 
fiscal  year  ends  shall  apply  to  an  amount  of  each  partner’s  share  of  such  partnership 
net  income  (determined  under  the  law  applicable  to  such  calendar  year)  equal  to  the 
proportion  which  the  part  of  such  fiscal  year  falling  within  such  calendar  year  bears 
to  the  full  fiscal  year:  Provided,  that  in  the  case  of  a personal  service  corporation 
with  respect  to  a fiscal  year  beginning  in  1917  and  ending  in  1918,  the  amount  specified 
in  clause  (1)  shall  not  be  subject  to  normal  tax. 

Parts  of  Income  Subject  to  Rates  for  Different  Years 

39.  Sec.  206.  That  whenever  parts  of  a taxpayer’s  income 
Directions  for  ap-  are  subject  to  rates  for  different  calendar  years,  the  part  sub- 

plication.  ject  to  the  rates  for  the  most  recent  calendar  year  shall  be 

placed  in  the  lower  brackets  of  the  rate  schedule  provided  in 
this  title,  the  part  subject  to  the  rates  for  the  next  preceding  calendar  year  shall  be 
placed  in  the  next  higher  brackets  of  the  rate  schedule  applicable  to  that  year,  and 
so  on  until  the  entire  net  income  has  been  accounted  for.  In  determining  the  income, 
any  deductions,  exemptions  or  credits  of  a kind  not  plainly  and  properly  chargeable 
against  the  income  taxable  at  rates  for  a preceding  year  shall  first  be  applied  against 
the  income  subject  to  rates  for  the  most  recent  calendar  year;  but  any  balance  thereof 
shall  be  applied  against  the  income  subject  to  the  rates  of  the  next  preceding  year 
or  years  until  fully  allowed. 


PART  II.— INDIVIDUALS 
Normal  Tax 


40.  Sec.  210.  That,  in  lieu  of  the  taxes  imposed  by  subdivision  (a)  of  Section  1 
of  the  Revenue  Act  of  1916  and  by  Section  1 of  the  Revenue  Act  of  1917*,  there  shall 
be  levied,  collected,  and  paid  for  each  taxable  year  upon  the  net  income  of  every 
individual  a normal  tax  at  the  following  rates : 


41. 


(a)  For  the  calendar  year  1918,  12  per  centum  of  the 
rrt_  ioiR  amount  of  the  net  income  in  excess  of  the  credits  provided 

in  Section  216  {par.  80-85 ) : Provided,  That  in  the  case  of  a 
citizen  or  resident  of  the  United  States  the  rate  upon  the  first  $4,000  of  such  excess 
amount  shall  be  6 per  centum; 


42. 

Thereafter. 


(b)  For  each  calendar  year  thereafter,  8 per  centum  of 
the  amount  of  the  net  income  in  excess  of  the  credits  pro- 
vided in  Section  216  {par.  80-85 ) : Provided,  That  in  the  case 
of  a citizen  or  resident  of  the  United  States  the  rate  upon  the  first  $4,000  of  such 
excess  amount  shall  be  4 per  centum. 

Surtax 


43.  . . Sec.  211.  (a)  That,  in  lieu  of  the  taxes  imposed  by  sub- 

In  addition  to  nor-  division  (b)  of  Section  1 of  the  Revenue  Act  of  1916  and  by 
mal  tax.  Section  2 of  the  Revenue  Act  of  1917,**  but  in  addition  to  the 

normal  tax  imposed  by  Section  210  {par.  40-42 ) of  this  Act, 
there  shall  be  levied,  collected,  and  paid  for  each  taxable  year  upon  the  net  income 
of  every  individual,  a surtax  equal  to  the  sum  of  the  following: 


*In  case  of  citizens  or  residents  of  U.  S.  rate  of  2%  on  net  income  over  $1,000  to  $3,000  and 
4%  over  $3,000  if  single;  and  2%  over  $2,000  to  $4,000  and  4%  over  $4,000  if  married  or  head 
of  a family,  and  an  additional  $200  exemption  for  each  dependent  child  under  18  or  if  incapable  of 
self-support  because  mentally  or  physically  defective.  In  case  of  nonresident  aliens,  2%  upon  net 
income  from  sources  within  U.  S.,  and  no  personal  exemption  allowed. 

**Surtax  equal  to  sum  of  the  following:  1%  upon  net  income  between  $5,000  and  $7,500;  2%, 
$7,500 — $10,000;  3%,  $10,000 — $12,500;  4%,  $12,500— $15,000;  5%,  $15,000— $20,000;  8%,  $20,- 
000 — $40,000;  12%,  $40,000 — $60,000;  17%,  $60,000  — $80,000;  22%,  $80,000  — $100,000;  27%, 
$100,000— $150,000;  31%,  $150,000 — $200,000;  37%,  $200,000 — $250,000;  42%,  $250,000  — $300,000; 
46%,  $300,000— $500,000;  50%,  $500,000— $750,000 ; 55%,  $750,000 — $1,000,000;  61%,  $1,000,000— 
$1,500,000;  62%,  $1,500,000— $2,000,000;  63%  over  $2,000,000. 


9 


Rates  applicable. 


1 per  centum  of  the  amount  of  which  the  net  income 


exceeds  $5,000  and 

2 per  centum  of  the  amount  by  which 
not  exceed  $8,000; 

3 per  centum  of  the  amount  by  which 
not  exceed  $10,000; 

4 per  centum  of  the  amount  by  which 
not  exceed  $12,000; 

5 per  centum  of  the  amount  by  which 
not  exceed  $14,000; 

6 per  centum  of  the  amount  by  which 
not  exceed  $16,000; 

7 per  centum  of  the  amount  by  which 
not  exceed  $18,000; 

8 per  centum  of  the  amount  by  which 
not  exceed  $20,000 ; 

9 per  centum  of  the  amount  by  which 
not  exceed  $22,000; 

10  per  centum  of  the  amount  by  which 
not  exceed  $24,000; 

11  per  centum  of  the  amount  by  which 
not  exceed  $26,000; 

12  per  centum  of  the  amount  by  which 
not  exceed  $28,000; 

13  per  centum  of  the  amount  by  which 
not  exceed  $30,000; 

14  per  centum  of  the  amount  by  which 
not  exceed  $32,000; 

15  per  centum  of  the  amount  by  which 
not  exceed  $34,000; 

16  per  centum  of  the  amount  by  which 
not  exceed  $36,000; 

17  per  centum  of  the  amount  by  which 
not  exceed  $38,000; 

18  per  centum  of  the  amount  by  which 
not  exceed  $40,000; 

19  per  centum  of  the  amount  by  which 
not  exceed  $42,000; 

20  per  centum  of  the  amount  by  which 
not  exceed  $44,000; 

21  per  centum  of  the  amount  by  which 
not  exceed  $46,000; 

22  per  centum  of  the  amount  by  which 
not  exceed  $48,000; 

23  per  centum  of  the  amount  by  which 
not  exceed  $50,000; 

24  per  centum  of  the  amount  by  which 
not  exceed  $52,000; 

25  per  centum  of  the  amount  by  which 
not  exceed  $54,000; 

26  per  centum  of  the  amount  by  which 
not  exceed  $56,000; 

27  per  centum  of  the  amount  by  which 
not  exceed  $58,000; 

28  per  centum  of  the  amount  by  which 
not  exceed  $60,000; 

29  per  centum  of  the  amount  by  which 
not  exceed  $62,000; 

30  per  centum  of  the  amount  by  which 
not  exceed  $64,000; 

31  per  centum  of  the  amount  by  which 
not  exceed  $66,000; 

10 


does  not  exceed  $6,000; 


the 

net 

income 

exceeds  $6,000 

and 

does 

the 

net 

income 

exceeds 

$8,000 

and 

does 

the 

net 

income 

exceeds 

$10,000 

and 

does 

the 

net 

income 

exceeds 

$12,000 

and 

does 

the 

net 

income 

exceeds 

$14,000 

and 

does 

the 

net 

income 

exceeds 

$16,000 

and 

does 

the 

net 

income 

exceeds 

$18,000 

and 

does 

the 

net 

income 

exceeds 

$20,000 

and 

does 

the 

net 

income 

exceeds 

$22,000 

and 

does 

the 

net 

income 

exceeds 

$24,000 

and 

does 

the 

net 

income 

exceeds 

$26,000 

and 

does 

the 

net 

income 

exceeds 

$28,000 

and 

does 

the 

net 

income 

exceeds 

$30,000 

and 

does 

the 

net 

income 

exceeds 

$32,000 

and 

does 

the 

net 

income 

exceeds 

$34,000 

and 

does 

the 

net 

income 

exceeds 

$36,000 

and 

does 

the 

net 

income 

exceeds 

$38,000 

and 

does 

the 

net 

income 

exceeds 

$40,000 

and 

does 

the 

net 

income 

exceeds 

$42,000 

and 

does 

the 

net 

income 

exceeds 

$44,000 

and 

does 

the 

net 

income 

exceeds 

$46,000 

and 

does 

the 

net 

income 

exceeds 

$48,000 

and 

does 

the 

net 

income 

exceeds 

$50,000 

and 

does 

the 

net 

income 

exceeds 

$52,000 

and 

does 

the 

net 

income 

exceeds 

$54,000 

and 

does 

the 

net 

income 

exceeds 

$56,000 

and 

does 

the 

net 

income 

exceeds 

$58,000 

and 

does 

the 

net 

income 

exceeds 

$60,000 

and 

does 

the 

net 

income 

exceeds 

$62,000 

and 

does 

the 

net 

income 

exceeds 

$64,000 

and 

does 

32  per  centum 
not  exceed  $68,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$66,000 

and 

does 

33  per  centum 
not  exceed  $70,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$68,000 

and 

does 

34  per  centum 
not  exceed  $72,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$70,000 

and 

does 

35  per  centum 
not  exceed  $74,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$72,000 

and 

does 

36  per  centum 
not  exceed  $76,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$74,000 

and 

does 

37  per  centum 
not  exceed  $78,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$76,000 

and 

does 

38  per  centum 
not  exceed  $80,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$78,000 

and 

does 

39  per  centum 
not  exceed  $82,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$80,000 

and 

does 

40  per  centum 
not  exceed  $84,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$82,000 

and 

does 

41  per  centum 
not  exceed  $86,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$84,000 

and 

does 

42  per  centum 
not  exceed  $88,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$86,000 

and 

does 

43  per  centum 
not  exceed  $90,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$88,000 

and 

does 

44  per  centum 
not  exceed  $92,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$90,000 

and 

does 

45  per  centum 
not  exceed  $94,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$92,000 

and 

does 

46  per  centum 
not  exceed  $96,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$94,000 

and 

does 

47  per  centum 
not  exceed  $98,000 

of 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$96,000 

and 

does 

48  per  centum  of 
not  exceed  $100,000; 

the 

amount 

by 

which  the 

net 

income 

exceeds 

$98,000 

and 

does 

52  per  centum  of  the  amount  by  which  the 

net  i 

income  < 

exceeds  $100,000 

and 

does 

not  exceed  $150,000; 

56  per  centum  of  the  amount  by  which  the  net  income  exceeds  $150,000  and  does 
not  exceed  $200,000; 

60  per  centum  of  the  amount  by  which  the  net  income  exceeds  $200,000  and  does 
not  exceed  $300,000; 

63  per  centum  of  the  amount  by  which  the  net  income  exceeds  $300,000  and  does 
not  exceed  $500,000; 

64  per  centum  of  the  amount  by  which  the  net  income  exceeds  $500,000  and  does 
not  exceed  $1,000,000; 

65  per  centum  of  the  amount  by  which  the  net  income  exceeds  $1,000,000. 

I*  (b)  In  the  case  of  a bona  fide  sale  of  mines,  oil  or  gas 

. . . . wells,  or  any  interest  therein,  where  the  principal  value  of  the 

limitation  in  case  pr0perty  has  been  demonstrated  by  prospecting  or  exploration 

oi  sale  oi  mines,  oil  an(j  discovery  WOrk  done  by  the  taxpayer,  the  portion  of  the 

or  gas  we  s.  tax  imposed  by  this  Section  {par.  43)  attributable  to  such  sale 

shall  not  exceed  20  per  centum  of  the  selling  price  of  such  property  or  interest. 

Net  Income  Defined 

45.  Sec.  212.  (a)  That  in  the  case  of  an  individual  the  term  “net  income”  means 

the  gross  income  as  defined  in  Section  213  {par.  48-60),  less  the  deductions  allowed  by 
Section  214  {par.  61-74). 

(b)  The  net  income  shall  be  computed  upon  the  basis  of 
the  taxpayer’s  annual  accounting  period  (fiscal  year  or  cal- 
endar year,  as  the  case  may  be)  in  accordance  with  the 
_ j method  of  accounting  regularly  employed  in  keeping  the  books 

’ of  such  taxpayer;  but  if  no  such  method  of  accounting  has 

been  so  employed,  or  if  the  method  employed  does  not  clearly 
reflect  the  income,  the  computation  shall  be  made  upon  such  basis  and  in  such  manner 
as  in  the  opinion  of  the  Commissioner  does  clearly  reflect  the  income.  If  the  tax- 

11 


Computed  on  basis 
of  annual  accounting 


payer’s  annual  accounting  period  is  other  than  a fiscal  year  as  defined  in  Section  200 
(par.  16 ) or  if  the  taxpayer  has  no  annual  accounting  period  or  does  not  keep  books, 
the  net  income  shall  be  computed  on  the  basis  of  the  calendar  year. 

47.  If  a taxpayer  changes  his  accounting  period  from  fiscal 
When  accounting  year  to  calendar  year,  from  calendar  year  to  fiscal  year,  or 

period  changed.  from  one  fiscal  year  to  another,  the  net  income  shall,  with  the 

approval  of  the  Commissioner,  be  computed  on  the  basis  of 
such  new  accounting  period,  subject  to  the  provisions  of  Section  226  (par.  1 19-120). 

Gross  Income  Defined 

48.  Sec.  213.  That  for  the  purposes  of  this  title  (except  as  otherwise  provided 
in  Section  233  (par.  144-147)  the  term  “gross  income” — 


49. 

Includes  gain  or 
profit  and  income 
derived  from  any 
source  whatever. 


50. 

Items  exempt. 

51. 

Proceeds 
insurance. 


o f life 


52 


(a)  Includes  gains,  profits,  and  income  derived  from 
salaries,  wages,  or  compensation  for  personal  service  (includ- 
ing in  the  case  of  the  President  of  the  United  States,  the 
judges  of  the  Supreme  and  inferior  courts  of  the  United 
States,  and  all  other  officers  and  employees,  whether  elected 
or  appointed,  of  the  United  States,  Alaska,  Hawaii,  or  any 

political  subdivision  thereof,  or  the  District  of  Columbia,  the  compensation  received 
as  such),  of  whatever  kind  and  in  whatever  form  paid,  or  from  professions,  vocations, 
trades,  businesses,  commerce,  or  sales,  or  dealings  in  property,  whether  real  or 
personal,  growing  out  of  the  ownership  or  use  of  or  interest  in  such  property;  also 
from  interest,  rent,  dividends,  securities,  or  the  transaction  of  any  business  carried 
on  for  gain  or  profit,  or  gains  or  profits  and  income  derived  from  any  source  whatever. 
The  amount  of  all  such  items  shall  be  included  in  the  gross  income  for  the  taxable 
year  in  which  received  by  the  taxpayer,  unless,  under  methods  of  accounting  permitted 
under  subdivision  (b)  of  Section  212  (par.  46-47)  any  such  amounts  are  to  be 
properly  accounted  for  as  of  a different  period;  but 

(b)  Does  not  include  the  following  items,  which  shall  be 
exempt  from  taxation  under  this  title : 

(1)  The  proceeds  of  life  insurance  policies  paid  upon  the 
death  of  the  insured  to  individual  beneficiaries  or  to  the  estate 
of  the  insured ; 

(2)  The  amount  received  by  the  insured  as  a return  of 
premium  or  premiums  paid  by  him  under  life  insurance, 
endowment,  or  annuity  contracts,  either  during  the  term  or 

at  the  maturity  of  the  term  mentioned  in  the  contract  or  upon  surrender  of  the 
contract ; 

(3)  The  value  of  property  acquired  by  gift,  bequest, 
devise,  or  descent  (but  the  income  from  such  property  shall 
be  included  in  gross  income)  ; 

(4)  Interest  upon  (a)  the  obligations  of  a State,  Terri- 
tory, or  any  political  subdivision  thereof,  or  the  District  of 
Columbia;  or  (b)  securities  issued  under  the  provisions  of 
the  Federal  Farm  Loan  Act  of  July  17,  1916;  or  (c)  the 
obligations  of  the  United  States  or  its  possessions;  or  (d) 
bonds  issued  by  the  War  Finance  Corporation : Provided, 
That  every  person  owning  any  of  the  obligations, 

securities  or  bonds  enumerated  in  clauses  (a),  (b),  (c),  and  (d)  shall, 
in  the  return  required  by  this  title,  submit  a statement  showing  the  number  and 
amount  of  such  obligations,  securities  and  bonds  owned  by  him  and  the  income 
received  therefrom,  in  such  form  and  with  such  information  as  the  Commissioner 
may  require.  In  the  case  of  obligations  of  the  United  States  issued  after  September  1, 
1917,  and  in  the  case  of  bonds  issued  by  the  War  Finance  Corporation,  the  interest 
shall  be  exempt  only  if  and  to  the  extent  provided  in  the 
Provisos  as  to  ex-  respective  Acts  authorizing  the  issue  thereof  as  amended  and 
emotions.  supplemented,  and  shall  be  excluded  from  gross  income  only 

if  and  to  the  extent  it  is  wholly  exempt  from  taxation  to  the 
taxpayer  both  under  this  title  and  under  Title  III  (par.  211-286)  ; 

(5)  The  income  of  foreign  governments  received  from 
investments  in  the  United  States  in  stocks,  bonds,  or  other 
domestic  securities,  owned  by  such  foreign  governments,  or 
from  interest  on  deposits  in  banks  in  the  United  States  of 
moneys  belonging  to  such  foreign  governments,  or  from  any 

other  source  within  the  United  States; 


Returned  premiums. 


53. 

Gifts,  bequests,  etc. 

54. 

Interest  upon  cer- 
t a i n governmental 
obligations  and  se- 
curities. 


55. 

Income  of  foreign 
governments  received 
in  U.  S. 


12 


sickness. 


57. 

Income  from  pub- 
lic utility  or  essential 
governmental  func- 
tion. 

58. 

Contracts  entered 
into  prior  to  9-8-16 
by  States,  Terri- 
t o r ies,  subdivisions, 
or  D.  C. 


59. 

C o m p e n sation, 
military  or  naval 
forces. 

60. 

Nonresident  aliens 
gross  income. 


56.  (6)  Amounts  received,  through  accident  or  health  insur- 

Compensation  for  ance  or  under  workmen’s  compensation  acts,  as  compensation 
personal  injuries  or  for  personal  injuries  or  sickness,  plus  the  amount  of  any 
damages  received  whether  by  suit  or  agreement  on  account 
of  such  injuries  or  sickness; 

(7)  Income  derived  from  any  public  utility  or  the  exer- 
cise of  any  essential  governmental  function  and  accruing  to 
any  State,  Territory,  or  the  District  of  Columbia,  or  any 
political  subdivision  of  a State  or  Territory,  or  income 
accruing  to  the  government  of  any  possession  of  the  United 
States,  or  any  political  subdivision  thereof. 

Whenever  any  State,  Territory,  or  the  District  of  Colum- 
bia, or  any  political  subdivision  of  a State  or  Territory,  prior 
to  September  8,  1916,  entered  in  good  faith  into  a contract 
with  any  person,  the  object  and  purpose  of  which  is  to  acquire, 
construct,  operate,  or  maintain  a public  utility,  no  tax  shall 
be  levied  under  the  provisions  of  this  title  upon  the  income 
derived  from  the  operation  of  such  public  utility,  so  far  as  the 
payment  thereof  will  impose  a loss  or  burden  upon  such  State,  Territory,  District  of 
Columbia,  or  political  subdivision;  but  this  provision  is  not  intended  to  confer  upon 
such  person  any  financial  gain  or  exemption  or  to  relieve  such  person  from  the  pay- 
ment of  a tax  as  provided  for  in  this  title  upon  the  part  or  portion  of  such  income 
to  which  such  person  is  entitled  under  such  contract; 

(8)  So  much  of  the  amount  received  during  the  present 
war  by  a person  in  the  military  or  naval  forces  of  the  United 
States  as  salary  or  compensation  in  any  form  from  the  United 
States  for  active  services  in  such  forces,  as  does  not  exceed 
$3,500. 

(c)  In  the  case  of  nonresident  alien  individuals,  gross 
income  includes  only  the  gross  income  from  sources  within 
the  United  States,  including  interest  on  bonds,  notes,  or  other 
interest-bearing  obligations  of  residents,  corporate  or  other- 
wise, dividends  from  resident  corporations,  and  including  all  amounts  received 

(although  paid  under  a contract  for  the  sale  of  goods  or  otherwise)  representing  profits 
on  the  manufacture  and  disposition  of  goods  within  the  United  States. 

Deductions  Allowed 

61.  Sec.  214.  (a)  That  in  computing  net  income  there  shall  be  allowed  as 

deductions : 

(1)  All  the  ordinary  and  necessary  expenses  paid  or 

incurred  during  the  taxable  year  in  carrying  on  any  trade  or 
business,  including  a reasonable  allowance  for  salaries  or 

necessary  expenses  Q^er  compensation  for  personal  services  actually  rendered, 

and  including  rentals  or  other  payments  required  to  be  made 
as  a condition  to  the  continued  use  or  possession,  for  purposes 
of  the  trade  or  business,  of  property  to  which  the  taxpayer  has  not  taken  or  is  not 
taking  title  or  in  which  he  has  no  equity; 

(2)  All  interest  paid  or  accrued  within  the  taxable  year 
on  indebtedness,  except  on  indebtedness  incurred  or  continued 
to  purchase  or  carry  obligations  or  securities  (other  than 
obligations  of  the  United  States  issued  after  September  24, 
1917),  the  interest  upon  which  is  wholly  exempt  from  taxation 
under  this  title  as  income  to  the  taxpayer,  or,  in  the  case  of 
a nonresident  alien  individual,  the  proportion  of  such  interest 
which  the  amount  of  his  gross  income  from  sources  within 
the  United  States  bears  to  the  amount  of  his  gross  income 
from  all  sources  within  and  without  the  United  States  ; 

(3)  Taxes  paid  or  accrued  within  the  taxable  year 
imposed  (a)  by  the  authority  of  the  United  States,  except 
income,  war  profits  and  excess-profits  taxes;  or  (b)  by  the 
authority  of  any  of  its  possessions,  except  the  amount  of 

, income,  war  profits  and  excess-profits  taxes  allowed  as  a 

come,  war  and  excess-  credit  under  Section  222  (par.  107-113)  ; or  (c)  by  the  author- 

profits  taxes,  an  d jty  Q£  any  gtate  or  Territory,  or  any  county,  school  district, 

those  assessed  municipality,  or  other  taxing  subdivision  of  any  State  or 


62. 


Ordinary  and 


in  carrying  on  busi- 
ness. 


63. 

Interest  on  indebt- 
edness, except  for 
obligations  or  securi- 
ties (other  than  those 
of  U.  S.  issued  after 
9-24-17)  upon 
which  interest  is  ex- 
empt from  tax. 

64. 

Taxes  imposed  by 
governmental  au- 
thority, except  in 


against  local  benefits.  Territory,  not  including  those  assessed  against  local  benefits 


13 


of  a kind  tending  to  increase  the  value  of  the  property  assessed;  or  (d)  in  the  case 
of  a citizen  or  resident  of  the  United  States,  by  the  authority  of  any  foreign  country, 
except  the  amount  of  income,  war-profits  and  excess-profits  taxes  allowed  as  a credit 
under  Section  222  (par.  107-113 ) ; or  (e)  in  the  case  of  a nonresident  alien  individual, 
by  the  authority  of  any  foreign  country  (except  income,  war-profits  and  excess-profits 
taxes,  and  taxes  assessed  against  local  benefits  of  a kind  tending  to  increase  the 
value  of  the  property  assessed),  upon  property  or  business; 

« (4)  Losses  sustained  during  the  taxable  year  and  not 

Losses  in  business,  compensated  for  by  insurance  or  otherwise,  if  incurred  in 
trade  or  business ; 


66. 

Losses  in  transac- 
tions entered  into  for 
profit. 


(5)  Losses  sustained  during  the  taxable  year  and  not 
compensated  for  by  insurance  or  otherwise,  if  incurred  in 
any  transaction  entered  into  for  profit,  though  not  connected 
with  the  trade  or  business ; but  in  the  case  of  a nonresident 
alien  individual  only  as  to  such  transactions  within  the  United 
States ; 


(6)  Losses  sustained  during  the  taxable  year  of  property 
'y  , . not  connected  with  the  trade  or  business  (but  in  the  case 

.Losses  01  property.  Q£  a nonresident  alien  individual  only  property  within  the 
United  States)  if  arising  from  fires,  storms,  shipwreck,  or  other  casualty,  or  from 
theft,  and  if  not  compensated  for  by  insurance  or  otherwise; 


68. 

Debts. 


(7)  Debts  ascertained  to  be  worthless  and  charged  off 
within  the  taxable  year ; 


(8)  A reasonable  allowance  for  the  exhaustion,  wear  and 
tear  of  property  used  in  the  trade  or  business,  including  a 
reasonable  allowance  for  obsolescence; 

(9)  In  the  case  of  buildings,  machinery,  equipment,  or 
other  facilities,  constructed,  erected,  installed,  or  acquired,  on 
or  after  April  6,  1917,  for  the  production  of  articles  con- 
tributing to  the  prosecution  of  the  present  war,  and  in  the  case 
of  vessels  constructed  or  acquired  on  or  after  such  date  for 
the  transportation  of  articles  or  men  contributing  to  the 
prosecution  of  the  present  war,  there  shall  be  allowed  a 
reasonable  deduction  for  the  amortization  of  such  part  of 
the  cost  of  such  facilities  or  vessels  as  has  been  borne  by  the  taxpayer,  but  not  again 
including  any  amount  otherwise  allowed  under  this  title  or  previous  Acts  of  Congress 
as  a deduction  in  computing  net  income.  At  any  time  within  three  years  after  the 
termination  of  the  present  war,  the  Commissioner  may,  and  at  the  request  of  the 
taxpayer  shall,  reexamine  the  return,  and  if  he  then  finds  as  a result  of  an  appraisal 
or  from  other  evidence  that  the  deduction  originally  allowed  was  incorrect,  the  taxes 
imposed  by  this  title  and  by  Title  III  (par.  211-286 ) for  the  year  or  years  affected 
shall  be  redetermined;  and  the  amount  of  tax  due  upon  such  redetermination,  if 
any,  shall  be  paid  upon  notice  and  demand  by  the  collector,  or  the  amount  of  tax 
overpaid,  if  any,  shall  be  credited  or  refunded  to  the  taxpayer  in  accordance  with 
the  provisions  of  Section  252  (par.  795)  ; 


69. 

Exhaustion,  wear, 
tear  and  obsoles- 
cence. 

70. 

Amortization  i n 
case  of  property 
erected  o r acquired 
after  4-5-17  necessary 
t o prosecution  o f 
present  war. 


(10)  In  the  case  of  mines,  oil  and  gas  wells,  other  natural 
deposits,  and  timber,  a reasonable  allowance  for  depletion  and 
for  depreciation  of  improvements,  according  to  the  peculiar 
conditions  in  each  case,  based  upon  cost  including  cost  of 
development  not  otherwise  deducted : Provided,  That  in  the 
case  of  such  properties  acquired  prior  to  March  1,  1913,  the 
fair  market  value  of  the  property  (or  the  taxpayer’s  interest 
therein)  on  that  date  shall  be  taken  in  lieu  of  cost  up 
to  that  date:  Provided  further,  That  in  the  case  of 
wells,  discovered  by  the  taxpayer,  on  or  after  March 
1,  1913,  and  not  acquired  as  the  result  of  purchase  of  a proven  tract  or  lease, 
where  the  fair  market  value  of  the  property  is  materially  disproportionate  to  the  cost, 
the  depletion  allowance  shall  be  based  upon  the  fair  market  value  of  the  property 
at  the  date  of  the  discovery,  or  within  thirty  days  thereafter ; such  reasonable  allow- 
ance in  all  the  above  cases  to  be  made  under  rules  and  regulations  to  be  prescribed 
by  the  Commissioner  with  the  approval  of  the  Secretary.  In  the  case  of  leases  the 
deductions  allowed  by  this  paragraph  shall  be  equitably  apportioned  between  the 
lessor  and  lessee ; 


71. 

Depletion  and  de- 
preciation of  im- 
provements in  case  of 
mines,  oil  and  gas 
wells,  other  natural 
deposits  and  timber. 

mines,  oil  and  gas 


14 


72. 

Contributions  o r 
gifts  to  religious, 
charitable,  scientific 
c educational  organ- 
izations o r voca- 
tional rehabilitation ; 
not  in  excess  of  15% 
of  net  income. 


73. 

Abatement  claim 
based  on  substantial 
loss  sustained  in  in- 
ventory value  or  ac- 
tual payment  of  re- 
bates. 


(11)  Contributions  or  gifts  made  within  the  taxable  year 
to  corporations  organized  and  operated  exclusively  for 
religious,  charitable,  scientific,  or  educational  purposes,  or  for 
the  prevention  of  cruelty  to  children  or  animals,  no  part  of 
the  net  earnings  of  which  inures  to  the  benefit  of  any  private 
stockholder  or  individual,  or  to  the  special  fund  for  vocational 
rehabilitation  authorized  by  Section  7 of  the  Vocational 
Rehabilitation  Act,  to  an  amount  not  in  excess  of  15  per 
centum  of  the  taxpayer’s  net  income  as  computed  without  the 
benefit  of  this  paragraph.  Such  contributions  or  gifts  shall 
be  allowable  as  deductions  only  if  verified  under  rules  and  regulations  prescribed  by 
the  Commissioner,  with  the  approval  of  the  Secretary.  In  the  case  of  a nonresident 
alien  individual  this  deduction  shall  be  allowed  only  as  to  contributions  or  gifts  made 
to  domestic  corporations,  or  to  such  vocational  rehabilitation  fund ; 

(12)  (a)  At  the  time  of  filing  return  for  the  taxable 
year  1918  a taxpayer  may  file  a claim  in  abatement  based  on 
the  fact  that  he  has  sustained  a substantial  loss  (whether  or 
not  actually  realized  by  sale  or  other  disposition)  resulting 
from  any  material  reduction  (not  due  to  temporary  fluctuation) 
of  the  value  of  the  inventory  for  such  taxable  year,  or  from 

the  actual  payment  after  the  close  of  such  taxable  year  of 

rebates  in  pursuance  of  contracts  entered  into  during  such 
year  upon  sales  made  during  such  year.  In  such  case  payment  of  the  amount  of  the 
tax  covered  by  such  claim  shall  not  be  required  until  the  claim  is  decided,  but  the 

taxpayer  shall  accompany  his  claim  with  a bond  in  double  the  amount  of  the  tax 

covered  by  the  claim,  with  sureties  satisfactory  to  the  Commissioner,  conditioned 
for  the  payment  of  any  part  of  such  tax  found  to  be  due,  with  interest.  If  any 
part  of  such  claim  is  disallowed  then  the  remainder  of  the  tax  due  shall  on  notice 
and  demand  by  the  collector  be  paid  by  the  taxpayer  with  interest  at  the  rate  of 
1 per  centum  per  month  from  the  time  the  tax  would  have  been  due  had  no  such 
claim  been  filed.  If  it  is  shown  to  the  satisfaction  of  the  Commissioner  that  such 
substantial  loss  has  been  sustained,  then  in  computing  the  tax  imposed  by  this  title 
the  amount  of  such  loss  shall  be  deducted  from  the  net  income,  (b)  If  no  such 
claim  is  filed,  but  it  is  shown  to  the  satisfaction  of  the  Commissioner  that  during 
the  taxable  year  1919  the  taxpayer  has  sustained  a substantial  loss  of  the  character 
above  described  then  the  amount  of  such  loss  shall  be  deducted  from  the  net  income 
for  the  taxable  year  1918  and  the  tax  imposed  by  this  title  for  such  year  shall  be 
redetermined  accordingly.  Any  amount  found  to  be  due  to  the  taxpayer  upon  the 
basis  of  such  redetermination  shall  be  credited  or  refunded  to  the  taxpayer  in 
accordance  with  the  provisions  of  Section  252  (par.  195). 

74  (b)  In  the  case  of  a nonresident  alien  individual  the 

' Deduction*  allowed  deductions  allowed  in  paragraphs  (1),  (4),  (7),  (8),  (9), 

nonresident  alilns  (10)’  (12)  (par * 6*>65>  68-71,  73),  and  clause  (e)  of  paragraph 
nonresident  aliens.  (3)  6/f)  of  subdjvision  (a)  shan  be  allowed  only  if  and 

to  the  extent  that  they  are  connected  with  income  arising  from  a source  within  the 
United  States;  and  the  proper  apportionment  and  allocation  of  the  deductions  with 
respect  to  sources  of  income  within  and  without  the  United  States  shall  be  determined 
under  rules  and  regulations  prescribed  by  the  Commissioner  with  the  approval  of 
the  Secretary. 

Items  Not  Deductible 


75.  Sec.  215.  That  hi  computing  net  income  no  deduction  shall  in  any  case  be 
allowed  in  respect  of — 


76.  Personal  expenses.  (a)  Personal,  living,  or  family  expenses ; 


77. 

Amounts  paid  t o 
increase  values. 

78. 

Amount  expended 
when  allowance  made. 

79. 

Premiums  paid  on 
life  insurance  poli- 
cies. 


(b)  Any  amount  paid  out  for  new  buildings  or  for 
permanent  improvements  or  betterments  made  to  increase  the 
value  of  any  property  or  estate; 

(c)  Any  amount  expended  in  restoring  property  or  in 
making  good  the  exhaustion  thereof  for  which  an  allowance 
is  or  has  been  made ; or 

(d)  Premiums  paid  on  any  life  insurance  policy  covering 
the  life  of  any  officer  or  employee,  or  of  any  person  financially 
interested  in  any  trade  or  business  carried  on  by  the  taxpayer, 
when  the  taxpayer  is  directly  or  indirectly  a beneficiary  under 
such  policy. 


15 


Credits  Allowed 

80.  Sec.  216.  That  for  the  purpose  of  the  normal  tax  only  there  shall  be  allowed 
the  following  credits : 

oj  (a)  The  amount  received  as  dividends  from  a corporation 

Dividends  which  is  taxable  under  this  title  upon  its  net  income,  and 

amounts  received  as  dividends  from  a personal  service  cor- 
poration out  of  earnings  or  profits  upon  which  income  tax  has  been  imposed  by  Act 
of  Congress ; 

(b)  The  amount  received  as  interest  upon  obligations  of 
the  United  States  and  bonds  issued  by  the  War  Finance 
Corporation,  which  is  included  in  gross  income  under  Section 
213  (par.  49,54 ) ; 

(c)  In  the  case  of  a single  person,  a personal  exemption 
of  $1,000,  or  in  the  case  of  the  head  of  a family  or  a married 
person  living  with  husband  or  wife,  a personal  exemption  «of 
$2,000.  A husband  and  wife  living  together  shall  receive  but 
one  personal  exemption  of  $2,000  against  their  aggregate  net 
income ; and  in  case  they  make  separate  returns,  the  personal 

exemption  of  $2,000  may  be  taken  by  either  or  divided  between  them ; 

(d)  $200  for  each  person  (other  than  husband  or  wife) 
dependent  upon  and  receiving  his  chief  support  from  the 
taxpayer,  if  such  dependent  person  is  under  eighteen  years 
of  age  or  is  incapable  of  self-support  because  mentally  or 
physically  defective. 

(e)  In  the  case  of  a nonresident  alien  individual  who  is 
a citizen  or  subject  of  a country  which  imposes  an  income  tax, 
the  credits  allowed  in  subdivisions  (c)  and  (d)  (par.  83-84 ) 
shall  be  allowed  only  if  such  country  allows  a similar  credit 

to  citizens  of  the  United  States  not  residing  in  such  country. 


82. 

Interest  included  in 
gross  income. 

83. 

Personal  exemp- 
tion. One  exemption 
of  $2,000  allowed  hus- 
band and  wife. 


84. 

Exemption  for  de- 
pendents. 


85. 

Nonresident  aliens 
credits. 


Nonresident  Aliens — Allowance  of  Deductions  and  Credits 


Complete  returns 
to  be  filed  by  non- 
resident aliens  to  re- 
ceive benefit  of  de- 
ductions and  credits. 


86.  Sec.  217.  That  a nonresident  alien  individual  shall  receive 

the  benefit  of  the  deductions  and  credits  allowed  in  this  title 
only  by  filing  or  causing  to  be  filed  with  the  collector  a true 
and  accurate  return  of  his  total  income  received  from  all 
sources  corporate  or  otherwise  in  the  United  States,  in  the 
manner  prescribed  by  this  title,  including  therein  all  the 
information  which  the  Commissioner  may  deem  necessary  for 
the  calculation  of  such  deductions  and  credits : Provided,  That  the  benefit  of  the  credits 
allowed  in  subdivisions  (c)  and  (d)  of  Section  216  (par.  83-84 ) may,  in  the  discretion 
of  the  Commissioner,  and  except  as  otherwise  provided  in  subdivision  (e)  (par.  85) 
of  that  section,  be  received  by  filing  a claim  therefor  with  the  withholding  agent. 
In  case  of  failure  to  file  a return,  the  collector  shall  collect  the  tax  on  such  income, 
and  all  property  belonging  to  such  nonresident  alien  individual  shall  be  liable  to 
distraint  for  the  tax. 


Partnerships  and  Personal  Service  Corporations 


87.  Sec.  218.  (a)  That  individuals  carrying  on  business  in 

partnership  shall  be  liable  for  income  tax  only  in  their 
individual  capacity.  There  shall  be  included  in  computing  the 
net  income  of  each  partner  his  distributive  share,  whether 
distributed  or  not,  of  the  net  income  of  the  partnership  for 
the  taxable  year,  or,  if  his  net  income  for  such  taxable  year 
is  computed  upon  the  basis  of  a period  different  from  that 
upon  the  basis  of  which  the  net  income  of  the  partnership  is 
computed,  then  his  distributive  share  of  the  net  income  of  the  partnership  for  any 
accounting  period  of  the  partnership  ending  within  the  fiscal  or  calendar  year  upon 
the  basis  of  which  the  partner’s  net  income  is  computed. 

The  partner  shall,  for  the  purpose  of  the  normal  tax,  be 


Partners  taxed 
only  in  their  individ- 
ual capacity.  Net  in- 
come to  be  distribu- 
tive share  of  net  in- 
come of  partnership. 


88. 


Credits  allowed  for 


allowed  as  credits,  in  addition  to  the  credits  allowed  to  him 


norm  1 tax  under  Section  216  (par.  80-85),  his  proportionate  share  of 

a * such  amounts  specified  in  subdivisions  (a)  and  (b)  of  section 

216  (par.  81-82 ) as  are  received  by  the  partnership. 

16 


89.  ! (b)  If  a fiscal  year  of  a partnership  ends  during  a calendar 

If  fiscal  year  ends  year  for  which  the  rates  of  tax  differ  from  those  for  the  pre- 
during  calendar  year  ceding  calendar  year,  then  (1)  the  rates  for  such  preceding 
v.  hen  rates  vary.  calendar  year  shall  apply  to  an  amount  of  each  partner’s  share 

of  such  partnership  net  income  equal  to  the  proportion  which 
the  part  of  such  fiscal  year  falling  within  such  calendar  year  bears  to  the  full  fiscal 
year,  and  (2)  the  rates  for  the  calendar  year  during  which  such  fiscal  year  ends  shall 
apply  to  the  remainder. 


90. 


(c)  In  the  case  of  an  individual  member  of  a partnership 
which  makes  return  for  a fiscal  year  beginning  in  1917  and 
ending  in  1918,  his  proportionate  share  of  any  excess-profits 


Prop  ortionate 

exceL  nro^ft^ta^for  tax  irnPosed  upon  the  partnership  under  the  Revenue  Act  of 
1917  Credited  1917  with  respect  to  that  part  of  such  fiscal  year  falling  in 

' * 1917,  shall,  for  the  purpose  of  determining  the  tax  imposed 

by  this  title,  be  credited  against  that  portion  of  the  net  income  embraced  in  his 
personal  return  for  the  taxable  year  1918  to  which  the  rates  for  1917  apply. 

(d)  The  net  income  of  the  partnership  shall  be  computed 
in  the  same  manner  and  on  the  same  basis  as  provided  in 
Section  212  {par.  45-47),  except  that  the  deduction  provided 
in  paragraph  (11)  of  subdivision  (a)  of  Section  214  {par.  72) 
shall  not  be  allowed. 


91. 

Computation  of  net 
income  of  partner- 
ships. 


(e)  Personal  service  corporations  shall  not  be  subject  to 
taxation  under  this  title,  but  the  individual  stockholders 
thereof  shall  be  taxed  in  the  same  manner  as  the  members 
of  partnerships.  All  the  provisions  of  this  title  relating  to 
partnerships  and  the  members  thereof  shall  so  far  as  prac- 
ticable apply  to  personal  service  corporations  and  the  stock- 
holders thereof : Provided,  That  for  the  purpose  of  this  sub- 
division amounts  distributed  by  a Personal  Service  Corporation  during  its  taxable 
year  shall  be  accounted  for  by  the  distributees ; and  any  portion  of  the  net  income 
remaining  undistributed  at  the  close  of  its  taxable  year  shall  be  accounted  for  by 
the  stockholders  of  such  corporation  at  the  close  of  its  taxable  year  in  proportion 
to  their  respective  shares. 


92. 

Individual  stock- 
holders of  personal 
service  corporations 
taxed  as  members 
of  partnerships. 


Estates  and  Trusts 


93. 

Taxes  apply  to  in- 
come 

94. 

Received  by  estates 
of  decedents, 

95. 

Accumulated  in 
trust, 

96. 

Held  for  distribu- 
tion, 

97. 

Distributed  to 
beneficiaries  or  held. 


Sec.  219.  (a)  That  the  tax  imposed  by  Sections  210 

{par.  40-42 ) and  211  {par.  43-44 ) shall  apply  to  the  income 
of  estates  or  of  any  kind  of  property  held  in  trust,  including — 

(1)  Income  received  by  estates  of  deceased  persons  during 
the  period  of  administration  or  settlement  of  the  estate; 

(2)  Income  accumulated  in  trust  for  the  benefit  of 
unborn  or  unascertained  persons  or  persons  with  contingent 
interests ; 

(3)  Income  held  for  future  distribution  under  the  terms 
of  the  will  or  trust;  and 

(4)  Income  which  is  to  be  distributed  to  the  beneficiaries 
periodically,  whether  or  not  at  regular  intervals,  and  the 
income  collected  by  a guardian  of  an  infant  to  be  held  or 
distributed  as  the  court  may  direct. 


98. 

Fiduciary  responsi- 
ble for  making  re- 
turn. 


(b)  The  fiduciary  shall  be  responsible  for  making  the 
return  of  income  for  the  estate  or  trust  for  which  he  acts. 
The  net  income  of  the  estate  or  trust  shall  be  computed  in 
the  same  manner  and  on  the  same  basis  as  provided  in  Section 
212  {par.  45-47),  except  that  there  shall  also  be  allowed  as 
a deduction  (in  lieu  of  the  deduction  authorized  by  paragraph  (11)  of  subdivision  (a) 
of  Section  214  {par.  72)  any  part  of  the  gross  income  which,  pursuant  to  the  terms 
of  the  will  or  deed  creating  the  trust,  is  during  the  taxable  year  paid  to  or  permanently 
set  aside  for  the  United  States,  any  state,  territory,  or  any  political  subdivision  thereof, 
or  the  District  of  Columbia,  or  any  corporation  organized  and  operated  exclusively 
for  religious,  charitable,  scientific,  or  educational  purposes,  or  for  the  prevention  of 
cruelty  to  children  or  animals,  no  part  of  the  net  earnings  of  which  inures  to  tbe~ 
benefit  of  any  private  stockholder  or  individual;  and  in  cases  under  paragraph  (4) 


17 


99. 

Tax  to  be  paid  by 
fiduciary.  Deductions 
and  credits  allowed. 


100. 

Tax  to  be  paid  by 
beneficiary  and  his 
distributive  share  in- 
cluded in  computing 
net  income.  Credits 
allowed  beneficiaries. 


of  subdivision  (a)  of  this  Section  (pdr.  97)  the  fiduciary  shall  include  In  the  fetufll 
a statement  of  each  beneficiary’s  distributive  share  of  such  net  income,  whether  or 
not  distributed  before  the  close  of  the  taxable  year  for  which  the  return  is  made. 

(c)  In  cases  under  paragraph  (1),  (2),  or  (3)  of  sub- 
division (a)  (par.  93-96 ) the  tax  shall  be  imposed  upon  the 
net  income  of  the  estate  or  trust  and  shall  be  paid  by  the 
fiduciary,  except  that  in  determining  the  net  income  of  the 
estate  of  any  deceased  person  during  the  period  of  administra- 
tion or  settlement  there  may  be  deducted  the  amount  of  any  income  properly  paid 
or  credited  to  any  legatee,  heir  or  other  beneficiary.  In  such  cases  the  estate  or  trust 
shall,  for  the  purpose  of  the  normal  tax,  be  allowed  the  same  credits  as  are  allowed 
to  single  persons  under  Section  216  (par.  80-83). 

(d)  In  cases  under  paragraph  (4)  of  subdivision  (a) 
(par.  97),  and  in  the  case  of  any  income  of  an  estate  during 
the  period  of  administration  or  settlement  permitted  by  sub- 
division (c)  (par.  99)  to  be  deducted  from  the  net  income 
upon  which  tax  is  to  be  paid  by  the  fiduciary,  the  tax  shall 
not  be  paid  by  the  fiduciary,  but  there  shall  be  included  in 
computing  the  net  income  of  each  beneficiary  his  distributive 
share,  whether  distributed  or  not,  of  the  net  income  of  the 

estate  or  trust  for  the  taxable  year,  or,  if  his  net  income  for  such  taxable  year  is 
computed  upon  the  basis  of  a period  different  from  that  upon  the  basis  of  which  the 
net  income  of  the  estate  or  trust  is  computed,  then  his  distributive  share  of  the  net 
income  of  the  estate  or  trust  for  any  accounting  period  of  such  estate  or  trust  ending 
within  the  fiscal  or  calendar  year  upon  the  basis  of  which  such  beneficiary’s  net  income 
is  computed.  In  such  cases  the  beneficiary  shall,  for  the  purpose  of  the  normal  tax, 
be  allowed  as  credits  in  addition  to  the  credits  allowed  to  him  under  Section  216 
(par.  80-83),  his  proportionate  share  of  such  amounts  specified  in  subdivisions  (a) 
and  (b)  of  Section  216  (par.  81-82)  as  are  received  by  the  estate  or  trust. 

Profits  of  Corporations  Taxable  to  Stockholders 

Sec.  220.  That  if  any  corporation,  however  created  or 
organized,  is  formed  or  availed  of  for  the  purpose  of  prevent- 
ing the  imposition  of  the  surtax  upon  its  stockholders  or 
members  through  the  medium  of  permitting  its  gains  and 
profits  to  accumulate  instead  of  being  divided  or  distributed, 
such  corporation  shall  not  be  subject  to  the  tax  imposed  by 
Section  230  (par.  124-127),  but  the  stockholders  or  members 
thereof  shall  be  subject  to  taxation  under  this  title  in  the 
same  manner  as  provided  in  subdivision  (e)  of  Section  218 
(Par.  92)  in  the  case  of  stockholders  of  a personal  service  corporation,  except  that 
the  tax  imposed  by  Title  III  shall  be  deducted  from  the  net  income  of  the  corporation 
before  the  computation  of  the  proportionate  share  of  each  stockholder  or  member. 
The  fact  that  any  corporation  is  a mere  holding  company,  or  that  the  gains  and 
profits  are  permitted  to  accumulate  beyond  the  reasonable  needs  of  the  business,  shall 
be  prima  facie  evidence  of  a purpose  to  escape  the  surtax;  but  the  fact  that  the 
gains  and  profits  are  in  any  case  permitted  to  accumulate  and  become  surplus  shall 
not  be  construed  as  evidence  of  a purpose  to  escape  the  tax  in  such  case  unless  the 
Commissioner  certifies  that  in  his  opinion  such  accumulation  is  unreasonable  for  the 
purposes  of  the  business.  When  requested  by  the  Commissioner,  or  any  collector, 
every  corporation  shall  forward  to  him  a correct  statement  of  such  gains  and  profits 
and  the  names  and  addresses  of  the  individuals  or  shareholders  who  would  be  entitled 
to  the  same  if  divided  or  distributed,  and  of  the  amounts  that  would  be  payable 
to  each. 

Payment  of  Tax  at  Source 

Sec.  221.  (a)  That  all  individuals,  corporations  and 

partnerships,  in  whatever  capacity  acting,  including  lessees  or 
mortgagors  of  real  or  personal  property,  fiduciaries,  employers, 
and  all  officers  and  employees  of  the  United  States,  having 
the  control,  receipt,  custody,  disposal,  or  payment,  of  interest, 
rent,  salaries,  wages,  premiums,  annuities,  compensations, 
remunerations,  emoluments,  or  other  fixed  or  determinable 
annual  or  periodical  gains,  profits,  and  income,  of  any  non- 
resident alien  individual  (other  than  income  received  as  divi- 
dends from  a corporation  which  is  taxable  under  this  title  upon 
its  net  income)  shall  (except  in  the  cases  provided  for  in  subdivision  (b)  (par.  103)  and 

lft 


101. 

Corporations 
formed  t o prevent 
imposition  of  surtax 
upon  stockholders, 
not  subject  to  income 
tax,  but  stockholders 
taxed. 


102. 

Persons  having 
control,  receipt,  cus- 
tody, disposal  or 
payment  of  fixed  or 
determinable  gains, 
profits  and  income  of 
nonresident  aliens  to 
withhold  tax. 


103. 

In  case  of  tax-free 
convenant  bonds 
obligor  to  withhold 
2%  of  interest  upon 
such  bonds  and  simi- 
lar obligations,  un- 
less signed  notice  is 
filed  with  withhold- 
ing agent  claiming 
benefit  of  credits. 


except  as  otherwise  provided  in  regulations  prescribed  by  the  Commissioner  under 
Section  217  ( par . 86))  deduct  and  withhold  from  such  annual  or  periodical  gains, 
profits,  and  income  a tax  equal  to  8 per  centum  thereof  : Provided,  That  the  Com- 
missioner may  authorize  such  tax  to  be  deducted  and  withheld  from  the  interest  upon 
any  securities  the  owners  of  which  are  not  known  to  the  withholding  agent. 

(b)  In  any  case  where  bonds,  mortgages,  or  deeds  of 
trust,  or  other  similar  obligations  of  a corporation  contain 
a contract  or  provision  by  which  the  obligor  agrees  to  pay 
any  portion  of  the  tax  imposed  by  this  title  upon  the  obligee, 
or  to  reimburse  the  obligee  for  any  portion  of  the  tax,  or  to 
pay  the  interest  without  deduction  for  any  tax  which  the 
obligor  may  be  required  or  permitted  to  pay  thereon  or  to 
retain  therefrom  under  any  law  of  the  United  States,  the 
obligor  shall  deduct  and  withhold  a tax  equal  to  2 per 
centum  of  the  interest  upon  such  bonds,  mortgages,  deeds  of 
trust,  or  other  obligations,  whether  such  interest  is  payable 
annually  or  at  shorter  or  longer  periods  and  whether  payable 

to  a nonresident  alien  individual  or  to  an  individual  citizen  or  resident  of  the  United 
States  or  to  a partnership:  Provided,  That  the  Commissioner  may  authorize  such 
tax  to  be  deducted  and  withheld  in  the  case  of  interest  upon  any  bonds,  mortgages, 
deeds  of  trust  or  other  obligations,  the  owners  of  which  are  not  known  to  the  with- 
holding agent.  Such  deduction  and  withholding  shall  not  be  required  in  the  case 
of  a citizen  or  resident  entitled  to  receive  such  interest,  if  he  files  with  the  withholding 
agent  on  or  before  February  1,  a signed  notice  in  writing  claiming  the  benefit  of 
the  credits  provided  in  subdivisions  (c)  and  (d)  of  Section  216  {par.  83-84)  ; nor  in 
the  case  of  a nonresident  alien  individual  if  so  provided  for  in  regulations  prescribed 
by  the  Commissioner  under  Section  217  (par.  86). 

(c)  Every  individual,  corporation,  or  partnership  required 
to  deduct  and  withhold  any  tax  under  this  section  shall  make 
return  thereof  on  or  before  March  first  of  each  year  and 
shall  on  or  before  June  fifteenth  pay  the  tax  to  the  official 
of  the  United  States  Government  authorized  to  receive  it. 

Every  such  individual,  corporation,  or  partnership  is  hereby  made  liable  for  such  tax 
and  is  hereby  indemnified  against  the  claims  and  demands  of  any  individual,  corpora- 
tion, or  partnership  for  the  amount  of  any  payments  made  in  accordance  with  the 
provisions  of  this  section. 

(d)  Income  upon  which  any  tax  is  required  to  be  with- 
held at  the  source  under  this  section  shall  be  included  in  the 
return  of  the  recipient  of  such  income,  but  any  amount  of 
tax  so  withheld  shall  be  credited  against  the  amount  of 
income  tax  as  computed  in  such  return. 

(e)  If  any  tax  required  under  this  section  to  be  deducted 
and  withheld  is  paid  by  the  recipient  of  the  income,  it  shall 
not  be  re-collected  from  the  withholding  agent ; nor  in  cases 
in  which  the  tax  is  so  paid  shall  any  penalty  be  imposed 
upon  or  collected  from  the  recipient  of  the  income  or  the 

withholding  agent  for  failure  to  return  or  pay  the  same,  unless  such  failure  was 
fraudulent  and  for  the  purpose  of  evading  payment. 

Credit  for  Taxes 

107.  Sec.  222.  (a)  That  the  tax  computed  under  Part  II  of  this  title  shall  be 

credited  with : 

10g  (1)  In  the  case  of  a citizen  of  the  United  States,  the 

Citizens  of  U S arn.ount  of  any  income,  war-profits  and  excess-profits  taxes 

paid  during  the  taxable  year  to  any  foreign  country,  upon 
income  derived  from  sources  therein,  or  to  any  possession  of  the  United  States ; and 
jqq  (2)  In  the  case  of  a resident  of  the  United  States,  the 

tt  q amount  of  any  such  taxes  paid  during  the  taxable  year  to 

Residents  01  u.  b.  any  posseSsion  of  the  United  States;  and 

jjq  (3)  In  the  case  of  an  alien  resident  of  the  United  States 

Alien  residents  of  who  is  a citizen  or  subject  of  a foreign  country,  the  amount 
jj  g of  any  such  taxes  paid  during  the  taxable  year  to  such  country, 

upon  income  derived  from  sources  therein,  if  such  country, 
in  imposing  such  taxes,  allows  a similar  credit  to  citizens  of  the  United  States  residing 
in  such  country;  and 


104. 

Returns  to  be 
made  and  tax  paid  by 
withholding  agent. 


105. 

Income  included  in 
recipient’s  return,  but 
tax  credited. 

106. 

Tax  paid  by  recip- 
ient of  income  not  to 
be  re-collected. 


19 


111. 

Member  O f part- 
nership o r benefi- 
ciary of  estate  or 
trust. 


(4)  In  the  case  of  any  such  individual  who  is  a member 
of  a partnership  or  a beneficiary  of  an  estate  or  trust,  his 
proportionate  share  of  such  taxes  of  the  partnership  or  the 
estate  or  trust  paid  during  the  taxable  year  to  a foreign 
country  or  to  any  possession  of  the  United  States,  as  the 
case  may  be. 


112. 

If  accrued  taxes 
differ  from  credits 
claimed  or  in  case  of 
refund,  tax  re- 
determined. 


(b)  If  accrued  taxes  when  paid  differ  from  the  amounts 
claimed  as  credits  by  the  taxpayer,  or  if  any  tax  paid  is 
refunded  in  whole  or  in  part,  the  taxpayer  shall  notify  the 
Commissioner  who  shall  redetermine  the  amount  of  the  tax 
due  under  Part  II  of  this  title  for  the  year  or  years  affected, 
and  the  amount  of  tax  due  upon  such  redetermination,  if  any, 
shall  be  paid  by  the  taxpayer  upon  notice  and  demand  by  the 
collector,  or  the  amount  of  tax  overpaid,  if  any,  shall  be  credited  or  refunded  to 
the  taxpayer  in  accordance  with  the  provisions  of  Section  252  ( par . 195).  In  the  case 
of  such  a tax  accrued  but  not  paid,  the  Commissioner  as  a condition  precedent  to  the 
allowance  of  this  credit  may  require  the  taxpayer  to  give  a bond  with  sureties  satis- 
factory to  and  to  be  approved  by  the  Commissioner  in  such  penal  sum  as  the  Com- 
missioner may  require,  conditioned  for  the  payment  by  the  taxpayer  of  any  amount 
of  tax  found  due  upon  any  such  redetermination;  and  the  bond  herein  prescribed 
shall  contain  such  further  conditions  as  the  Commissioner  may  require. 


113. 

Credits  allowed 
only  on  satisfactory 
evidence. 


(c)  These  credits  shall  be  allowed  only  if  the  taxpayer 
furnishes  evidence  satisfactory  to  the  Commissioner  showing 
the  amount  of  income  derived  from  sources  within  such 
foreign  country  or  such  possession  of  the  United  States,  and 
all  other  information  necessary  for  the  computation  of  such 
credits. 


Individual  Returns 


Sec.  223.  That  every  individual  having  a net  income 
for  the  taxable  year  of  $1,000  or  over  if  single  or  if  married 
and  not  living  with  husband  or  wife,  or  of  $2,000  or  over 
if  married  and  living  with  husband  or  wife,  shall  make  under 
oath  a return  stating  specifically  the  items  of  his  gross  income 
and  the  deductions  and  credits  allowed  by  this  title.  If  a 
husband  and  wife  living  together  have  an  aggregate  net  income  of  $2,000  or  over, 
each  shall  make  such  a return  unless  the  income  of  each  is  included  in  a single  joint 
return. 


114. 

To  be  made  of  net 
income  of  $1,000  and 
over  if  single  and 
v-,000  if  married. 


115. 

Returns  by  author- 
ized  agent  or 
guardian. 


If  the  taxpayer  is  unable  to  make  his  own  return,  the 
return  shall  be  made  by  a duly  authorized  agent  or  by  the 
guardian  or  other  person  charged  with  the  care  of  the  person 
or  property  of  such  taxpayer. 


Partnership  Returns 


116. 

To  include  names 
and  addresses  of 
members  and  dis- 
tributive shares. 

individual.  The  return 


Sec.  224.  That  every  partnership  shall  make  a return  for 
each  taxable  year,  stating  specifically  the  items  of  its  gross 
income"  and  the  deductions  allowed  by  this  title,  and  shall 
include  in  the  return  the  names  and  addresses  of  the  indi- 
viduals who  would  be  entitled  to  share  in  the  net  income  if 
distributed  and  the  amount  of  the  distributive  share  of  each 
shall  be  sworn  to  by  any  one  of  the  partners. 


Fiduciary  Returns 

Sec.  225.  That  every  fiduciary  (except  receivers  appointed 
by  authority  of  law  in  possession  of  part  only  of  the  property 
of  an  individual)  shall  make  under  oath  a return  for  the 
individual,  estate  or  trust  for  which  he  acts  (1)  if  the  net 
income  of  such  individual  is  $1,000  or  over  if  single  or  if 
married  and  not  living  with  husband  or  wife,  or  $2,000  or 
over  if  married  and  living  with  husband  or  wife,  or  (2)  if  the  net  income  of  such 
estate  or  trust  is  $1,000  or  over  or  if  any  beneficiary  of  such  estate  or  trust  is  a 
nonresident  alien,  stating  specifically  the  items  of  the  gross  income  and  the  deductions 
and  credits  allowed  by  this  title.  Under  such  regulations  as  the  Commissioner  with 
the  approval  of  the  Secretary  may  prescribe,  a return  made  by  one  of  two  or  more 


117. 

Fiduciaries  to  make 
returns  for  individ- 
uals, estates  or  trusts 
for  which  they  act. 


20 


joint  fiduciaries  and  filed  in  the  office  of  the  collector  of  the  district  where  such 
fiduciary  resides  shall  be  a sufficient  compliance  with  the  above  requirement.  The 
fiduciary  shall  make  oath  that  he  has  sufficient  knowledge  of  the  affairs  of  such 
individual  estate  or  trust  to  enable  him  to  make  the  return,  and  that  the  same  is, 
to  the  best  of  his  knowledge  and  belief,  true  and  correct. 

118.  Fiduciaries  required  to  make  returns  under  this  Act  shall  be  subject  to  all 
the  provisions  of  this  Act  which  apply  to  individuals. 


Returns  When  Accounting  Period  Changed 


119.  Sec.  226.  That  if  a taxpayer,  with  the  approval  of  the 

Separate  returns  re-  Commissioner,  changes  the  basis  of  computing  net  income 
quired.  from  fiscal  year  to  calendar  year  a separate  return  shall  be 

made  for  the  period  between  the  close  of  the  last  fiscal  year 
for  which  return  was  made  and  the  following  December  31.  If  the  change  is  from 
calendar  year  to  fiscal  year,  a separate  return  shall  be  made  for  the  period  between 
the  close  of  the  last  calendar  year  for  which  return  was  made  and  the  date  designated 
as  the  close  of  the  fiscal  year.  If  the  change  is  from  one  fiscal  year  to  another  fiscal 
year  a separate  return  shall  be  made  for  the  period  between  the  close  of  the  former 
fiscal  year  and  the  date  designated  as  the  close  of  the  new  fiscal  year.  If  a taxpayer 
making  his  first  return  for  income  tax  keeps  his  accounts  on  the  basis  of  a fiscal  year 
he  shall  make  a separate  return  for  the  period  between  the  beginning  of  the  calendar 
year  in  which  such  fiscal  year  ends  and  the  end  of  such  fiscal  year. 


In  all  the  above  cases  the  net  income  shall  be  computed 
on  the  basis  of  such  period  for  which  separate  return  is  made, 
and  the  tax  shall  be  paid  thereon  at  the  rate  for  the  calendar 
year  in  which  such  period  is  included;  and  the  credits  pro- 
vided in  subdivisions  (c)  and  (d)  of  Section  216  (par.  83-84) 
shall  be  reduced  respectively  to  amounts  which  bear  the  same 
ratio  to  the  full  credits  provided  in  such  subdivisions  as  the  number  of  months  in 
such  period  bears  to  twelve  months. 


120. 

Net  income  com- 
puted on  period 
covered  and  credits 
proportioned. 


Time  and  Place  for  Filing  Returns 


Sec.  227.  (a)  That  returns  shall  be  made  on  or  before 

the  fifteenth  day  of  the  third  month  following  the  close  of 
the  fiscal  year,  or,  if  the  return  is  made  on  the  basis  of  the 
calendar  year,  then  the  return  shall  be  made  on  or  before  the 
fifteenth  day  of  March.  The  Commissioner  may  grant  a 
reasonable  extension  of  time  for  filing  returns  whenever  in 
his  judgment  good  cause  exists  and  shall  keep  a record  of  every  such  extension  and 
the  reason  therefor.  Except  in  the  case  of  taxpayers  who  are  abroad,  no  such 
extension  shall  be  for  more  than  six  months. 


121. 

To  be  made  by 
March  15  or  15th  day 
of  3rd  month  after 
close  of  fiscal  year. 


122. 

To  be  made  to  col- 
lector for  district  or 
at  Baltimore,  Md. 


(b)  Returns  shall  be  made  to  the  collector  for  the  district 
in  which  is  located  the  legal  residence  or  principal  place  of 
business  of  the  person  making  the  return,  or,  if  he  has  no 
legal  residence  or  principal  place  of  business  in  the  United 
States,  then  to  the  collector  at  Baltimore,  Maryland. 


Understatement  in  Returns 

Sec.  228.  That  if  the  collector  or  deputy  collector  has 
reason  to  believe  that  the  amount  of  any  income  returned 
is  understated,  he  shall  give  due  notice  to  the  taxpayer  making 
the  return  to  show  cause  why  the  amount  of  the  return  should 
not  be  increased,  and  upon  proof  of  the  amount  understated, 
may  increase  the  same  accordingly.  Such  taxpayer  may  fur- 
nish sworn  testimony  to  prove  any  relevant  facts  and  if 
dissatisfied  with  the  decision  of  the  collector  may  appeal  to  the  Commissioner  for 
his  decision,  under  such  rules  of  procedure  as  may  be  prescribed  by  the  Commissioner 
with  the  approval  of  the  Secretary. 


123. 

Income  understated 
increased  b y collec- 
tor. Appeal  to  Com- 
missioner if  dissatis- 
fied with  decision. 


PART  III.— CORPORATIONS 
Tax  on  Corporations 

124.  Sec.  230.  (a)  That,  in  lieu  of  the  taxes  imposed  by  Section  10  of  the 

Revenue  Act  of  1916,  as  amended  by  the  Revenue  Act  of  1917,  and  by  Section  4 of 

21 


the  Revenue  Act  of  1917*,  there  shall  be  levied,  collected,  and  paid  for  each  taxable 
year  upon  the  net  income  of  every  corporation  a tax  at  the  following  rates: 


125. 


For  calendar  year 
1918. 

126. 

Thereafter. 


(1)  For  the  calendar  year  1918,  12  per  centum  of  the 
amount  of  the  net  income  in  excess  of  the  credits  provided  in 
Section  236  {par.  165-168)  ; and 

(2)  For  each  calendar  year  thereafter,  10  per  centum  of 
such  excess  amount. 


(b)  For  the  purposes  of  the  Act  approved  March  21,  1918, 
entitled  “An  Act  to  provide  for  the  operation  of  transporta- 
tion systems  while  under  Federal  control,  for  the  just  com- 
pensation of  their  owners  and  for  other  purposes,”  five-sixths 
of  the  tax  imposed  by  paragraph  (1)  of  subdivision  (a)  {par.  125)  and  four-fifths 
of  the  tax  imposed  by  paragraph  (2)  of  subdivision  (a)  {par.  126)  shall  be  treated 
as  levied  by  an  Act  in  amendment  of  Title  I of  the  Revenue  Act  of  1917. 


127. 

Railroads  under 
Federal  Control. 


Conditional  and  Other  Exemptions 


128. 

Exempt  from  tax. 

129. 

Labor  organiza- 
tions. 

130. 

Mutual  savings 
banks. 


Sec.  231.  That  the  following  organizations  shall  be 
exempt  from  taxation  under  this  title — 

(1)  Labor,  agricultural,  or  horticultural  organizations; 

(2)  Mutual  savings  banks  not  having  a capital  stock 
represented  by  shares ; 


131. 

Fraternal  benefi 
ciary  societies. 

ment  of  life,  sick 


or  association  or  their  dependents; 


(3)  Fraternal  beneficiary  societies,  orders,  or  associa- 
tions, (a)  operating  under  the  lodge  system  or  for  the 
exclusive  benefit  of  the  members  of  a fraternity  itself  operat- 
ing under  the  lodge  system,  and  (b)  providing  for  the  pay- 
accident,  or  other  benefits  to  the  members  of  such  society,  order 


132. 

Building  and  loan 
associations. 

133. 

Cemetery  c o m - 
panies. 


(4)  Domestic  building  and  loan  associations  and  co- 
operative banks  without  capital  stock  organized  and  operated 
for  mutual  purposes  and  without  profit ; 

(5)  Cemetery  companies  owned  and  operated  exclusively 
for  the  benefit  of  their  members ; 


134. 

Religious,  charita- 
ble, scientific  or  edu- 
c a t i o n a 1 organiza- 
tions. 

135. 

Business  leagues, 
boards  of  trade,  etc. 

136. 

Civic  leagues. 

137. 

Pleasure  or  recrea- 
tion clubs. 


(6)  Corporations  organized  and  operated  exclusively  for 
religious,  charitable,  scientific,  or  educational  purposes,  or 
for  the  prevention  of  cruelty  to  children  or  animals,  no  part 
of  the  net  earnings  of  which  inures  to  the  benefit  of  any 
private  stockholder  or  individual ; 

(7)  Business  leagues,  chambers  of  commerce,  or  boards 
of  trade,  not  organized  for  profit  and  no  part  of  the  net 
earnings  of  which  inures  to  the  benefit  of  any  private  stock- 
holder or  individual ; 

(8)  Civic  leagues  or  organizations  not  organized  for 
profit  but  operated  exclusively  for  the  promotion  of  social 
welfare ; 

(9)  Clubs  organized  and  operated  exclusively  for  pleasure, 
recreation,  and  other  nonprofitable  purposes,  no  part  of  the 
net  earnings  of  which  inures  to  the  benefit  of  any  private 
stockholder  or  member ; 


(10)  Farmers’  or  other  mutual  hail,  cyclone,  or  fire 
insurance  companies,  mutual  ditch  or  irrigation  companies, 
mutual  and  co-operative  telephone  companies,  or  like  organiza- 
tions of  a purely  local  character,  the  income  of  which  consists 
solely  of  assessments,  dues,  and  fees  collected  from  members 
for  the  sole  purpose  of  meeting  expenses ; 


138. 

Mutual  insurance 
or  co-operative  com- 
panies. 


*Tax  at  the  rate  of  6%  on  amount  of  total  net  income;  and  an  additional  tax  of  10%  on  undis- 
tributed net  income  6 months  after  end  of  calendar  or  fiscal  year,  excluding  any  income  taxes  paid 
within  the  year.  The  undistributed  net  income  for  the  purpose  of  this  tax  reduced  by  such  portion  as 
is  employed  or  required  in  the  business  or  invested  in  obligations  of  U.  S.  issued  after  September 
1,  1917. 


22 


139. 

Farmers,  fruit 
growers  and  like 
mutual  sales  agents. 


140. 

Holding  corpora- 
tions of  exempt  or- 
ganizations. 


(11)  Farmers',  Fruit  Growers’,  or  like  associations,  organ- 
ized and  operated  as  sales  agents  for  the  purpose  of  marketing 
the  products  of  members  and  turning  back  to  them  the  pro- 
ceeds of  sales,  less  the  necessary  selling  expenses,  on  the 
basis  of  the  quantity  of  produce  furnished  by  them; 

(12)  Corporations  organized  for  the  exclusive  purpose 
of  holding  title  to  property,  collecting  income  therefrom,  and 
turning  over  the  entire  amount  thereof,  less  expenses,  to  an 
organization  which  itself  is  exempt  from  the  tax  imposed 
by  this  title; 


(13)  Federal  land  banks  and  national  farm-loan  associa- 
1 a i i j tions  as  provided  in  Section  26  of  the  Act  approved  July  17, 

federal  land  ba  s entitled  “An  Act  to  provide  capital  for  agricultural 

and  national  tarm-  development,  to  create  standard  forms  of  investment  based 
loan  associations.  upon  farm  mortgage,  to  equalize  rates  of  interest  upon  farm 
loans,  to  furnish  a market  for  United  States  bonds,  to  create  Government  depositaries 
and  financial  agents  for  the  United  States,  and  for  other  purposes”; 


142.  (14)  Personal  service  corporations. 

Personal  service 
corporations. 

Net  Income  Defined 


143.  Sec.  232.  (a)  That  in  the  case  of  a corporation  subject  to  the  tax  imposed 

by  Section  230  (par.  124-127 ) the  term  “net  income”  means  the  gross  income  as  defined 
in  Section  233  (par.  144- 147)  less  the  deductions  allowed  by  Section  234  (par. 
148-163 ),  and  the  net  income  shall  be  computed  on  the  same  basis  as  is  provided  in 
subdivision  (b)  of  Section  212  (par.  46-47 ) or  in  Section  226  (par.  1 19-120). 


Gross  Income  Defined 


144.  Sec.  233.  (a)  That  in  the  case  of  a corporation  subject 

“Gross  income.”  to  the  tax  imposed  by  Section  230  (par.  124-127 ) the  term 
“gross  income”  means  the  gross  income  as  defined  in  Section 
213  (par.  48-60),  except  that; 


14-  (1)  In  the  case  of  life  insurance  companies  there  shall 

1 j .f  . not  be  included  in  gross  income  such  portion  of  any  actual 

. e insurance  o - premjum  received  from  any  individual  policyholder  as  is 
panies.  paid  back  or  credited  to  or  treated  as  an  abatement  of  premium 

of  such  policyholder  within  the  taxable  year. 


146.  * (2)  Mutual  marine  insurance  companies  shall  include  in 

Mutual  marine  in-  gross  income  the  gross  premiums  collected  and  received  by 
surance  companies.  them  less  amounts  paid  for  reinsurance. 


(b)  In  the  case  of  a foreign  corporation  gross  income 
Foreign  corpora-  deludes  only  the  gross  income  from  sources  within  the 
tions  gross  income"  United  States,  including  the  interest  on  bonds,  notes,  or  other 
g * interest-bearing  obligations  of  residents,  corporate  or  other- 

wise, dividends  from  resident  corporations,  and  including  all  amounts  received 
(although  paid  under  a contract  for  the  sale  of  goods  or  otherwise)  representing 
profits  on  the  manufacture  and  disposition  of  goods  within  the  United  States. 


Deductions  Allowed 


148. 

Deductions. 


Sec.  234.  (a)  That  in  computing  the  net  income  of  a 

corporation  subject  to  the  tax  imposed  by  Section  230  (par. 
124-127 ) there  shall  be  allowed  as  deductions: 


149.  (1)  All  the  ordinary  and  necessary  expenses  paid  or 

Ordinary  and  incurred  during  the  taxable  year  in  carrying  on  any  trade  or 
necessary  expenses  business,  including  a reasonable  allowance  for  salaries  or 
for  carrying  on  busi-  other  compensation  for  personal  services  actually  rendered, 
ness.  and  including  rentals  or  other  payments  required  to  be  made 

as  a condition  to  the  continued  use  or  possession  of  property 
to  which  the  corporation  has  not  taken  or  is  not  taking  title,  or  in  which  it  has 
no  equity; 


23 


150.  (2)  All  interest  paid  or  accrued  within  the  taxable  year 

Interest  on  indebt-  on  its  indebtedness,  except  on  indebtedness  incurred  or  con- 
edness,  except  obliga-  tinued  to  purchase  or  carry  obligations  or  securities  (other 
tions  o r securities  than  obligations  of  the  United  States  issued  after  September 
(other  than  those  of  24,  1917)  the  interest  upon  which  is  wholly  exempt  from 
U.  S.  issued  after  taxation  under  this  title  as  income  to  the  taxpayer,  or,  in 
9-24-17)  exempt  from  the  case  of  a foreign  corporation,  the  proportion  of  such 
tax.  interest  which  the  amount  of  its  gross  income  from  sources 

within  the  United  States  bears  to  the  amount  of  its  gross 
income  from  all  sources  within  and  without  the  United  States ; 


151. 

Taxes  imposed  by 
governmental  au- 
thority except  in- 
come, war  and  excess 
profits  taxes  and 
those  assessed 
against  local  bene- 
fits. 


(3)  Taxes  paid  or  accrued  within  the  taxable  year  imposed 
(a)  by  the  authority  of  the  United  States,  except  income, 
war  profits  and  excess-profits;  or  (b)  by  the  authority  of 
any  of  its  possessions,  except  the  amount  of  income,  war- 
profits  and  excess-profits  taxes  allowed  as  a credit  under 
Section  238  {par.  170-173 ) ; or  (c)  by  the  authority  of  any 
State  or  Territory,  or  any  county,  school  district,  municipality, 
or  other  taxing  subdivision  of  any  State  or  Territory,  not 
including  those  assessed  against  local  benefits  of  a kind 
tending  to  increase  the  value  of  the  property  assessed;  or 
(d)  in  the  case  of  a domestic  corporation,  by  the  authority  of  any  foreign  country, 
except  the  amount  of  income,  war-profits  and  excess-profits  taxes  allowed  as  a credit 
under  Section  238  {par.  170-173)  ; or  (e)  in  the  case  of  a foreign  corporation,  by 
the  authority  of  any  foreign  country  (except  income,  war-profits  and  excess-profits 
taxes,  and  taxes  assessed  against  local  benefits  of  a kind  tending  to  increase  the  value 
of  the  property  assessed),  upon  the  property  or  business:  Provided,  That  in  the  case 
of  obligors  specified  in  subdivision  (b)  of  Section  221  {par.  103 ) no  deduction  for 
the  payment  of  the  tax  imposed  by  this  title  or  any  other  tax  paid  pursuant  to  the 
contract  or  provision  referred  to  in  that  subdivision,  shall  be  allowed ; 


(4)  Losses  sustained  during  the  taxable  year  and  not 
compensated  for  by  insurance  or  otherwise; 

(5)  Debts  ascertained  to  be  worthless  and  charged  off 
within  the  taxable  year ; 

(6)  Amounts  received  as  dividends  from  a corporation 
which  is  taxable  under  this  title  upon  its  net  income,  and 
amounts  received  as  dividends  from  a personal  service  cor- 
poration out  of  earnings  or  profits  upon  which  income  tax  has  been  imposed  by  Act 
of  Congress; 


152. 

Losses  sustained. 

153. 

Worthless  debts. 

154. 

Dividends. 


155. 

Exhaustion,  wear, 
tear  and  obsoles- 
cence. 


(7)  A reasonable  allowance  for  the  exhaustion,  wear 
and  tear  of  property  used  in  the  trade  or  business,  including 
a reasonable  allowance  for  obsolescence; 


156. 

Amortization  i n 
case  of  property 
erected  or  acquired 
after  4-5-17  necessary 
for  prosecution  of 
war. 


(8)  In  the  case  of  buildings,  machinery,  equipment,  or 
other  facilities,  constructed,  erected,  installed,  or  acquired,  on 
or  after  April  6,  1917,  for  the  production  of  articles  con- 
tributing to  the  prosecution  of  the  present  war,  and  in  the 

case  of  vessels  constructed  or  acquired  on  or  after  such  date 
for  the  transportation  of  articles  or  men  contributing  to  the 
prosecution  of  the  present  war,  there  shall  be  allowed  a rea- 
sonable deduction  for  the  amortization  of  such  part  of  the 
cost  of  such  facilities  or  vessels  as  has  been  borne  by  the  taxpayer,  but  not  again 
including  any  amount  otherwise  allowed  under  this  title  or  previous  acts  of  Congress 
as  a deduction  in  computing  net  income.  At  any  time  within  three  years  after  the 
termination  of  the  present  war,  the  Commissioner  may,  and  at  the  request  of  the 
taxpayer  shall,  reexamine  the  return,  and  if  he  then  finds  as  a result  of  an  appraisal 

or  from  other  evidence  that  the  deduction  originally  allowed  was  incorrect,  the  taxes 

imposed  by  this  title  and  by  Title  III  {par.  211-286 ) for  the  year  or  years  affected 
shall  be  redetermined;  and  the  amount  of  tax  due  upon  such  redetermination,  if  any, 
shall  be  paid  upon  notice  and  demand  by  the  collector,  or  the  amount  of  tax  over- 
paid, if  any,  shall  be  credited  or  refunded  to  the  taxpayer  in  accordance  with  the 
provisions  of  Section  252  {par.  195)  ; 


24 


(9)  In  the  case  of  mines,  oil  and  gas  wells,  other  natural 
deposits  and  timber,  a reasonable  allowance  for  depletion  and 
for  depreciation  of  improvements,  according  to  the  peculiar 
conditions  in  each  case,  based  upon  cost  including  cost  of 
development  not  otherwise  deducted : Provided,  That  in  the 
case  of  such  properties  acquired  prior  to  March  1,  1913,  the 
fair  market  value  of  the  property  (or  the  taxpayer’s  interest 
therein)  on  that  date  shall  be  taken  in  lieu  of  cost  up  to 
that  date : Provided  further,  That  in  the  case  of  mines,  oil 
and  gas  wells,  discovered  by  the  taxpayer,  on  or  after  March  1,  1913,  and  not  acquired 
as  the  result  of  purchase  of  a proven  tract  or  lease,  where  the  fair  market  value  of 
the  property  is  materially  disproportionate  to  the  cost,  the  depletion  allowance  shall 
be  based  upon  the  fair  market  value  of  the  property  at  the  date  of  the  discovery,  or 
within  thirty  days  thereafter;  such  reasonable  allowance  in  all  the  above  cases  to  be 
made  under  rules  and  regulations  to  be  prescribed  by  the  Commissioner  with  the 
approval  of  the  Secretary.  In  the  case  of  leases  the  deductions  allowed  by  this  para- 
graph shall  be  equitably  apportioned  between  the  lessor  and  lessee; 


157. 

Allowance  for  de- 
pletion and  deprecia- 
tion of  improvements 
in  case  of  mines,  oil 
and  gas  wells,  other 
natural  deposits  and 
timber. 


158. 

In  case  of  insur- 
ance companies  ad- 
d i t i o n to  reserve 
funds  and  sums  paid 
on  policy  and  annuity 
contracts. 


(10)  In  the  case  of  insurance  companies,  in  addition  to 
the  above:  (a)  The  net  addition  required  by  law  to  be  made 
within  the  taxable  year  to  reserve  funds  (including  in  the 
case  of  assessment  insurance  companies  the  actual  deposit  of 
sums  with  State  or  Territorial  officers  pursuant  to  law  as 
additions  to  guarantee  or  reserve  funds)  ; and  (b)  the  sums 
other  than  dividends  paid  within  the  taxable  year  on  policy 
and  annuity  contracts; 


159. 

Reserve  funds  of 
corporations  issuing 
combination  policies 
on  weekly  premium 
payment  plan. 


(11)  In  the  case  of  corporations  issuing  policies  cover- 
ing life,  health,  and  accident  insurance  combined  in  one  policy 
issued  on  the  weekly  premium  payment  plan  continuing  for 
life  and  not  subject  to  cancellation,  in  addition  to  the  above, 
such  portion  of  the  net  addition  (not  required  by  law)  made 
within  the  taxable  year  to  reserve  funds  as  the  Commissioner 
finds  to  be  required  for  the  protection  of  the  holders  of  such 
policies  only; 


160. 

Returned  premiums 
in  case  of  mutual  ma- 
rine insurance  com- 
panies. 


(12)  In  the  case  of  mutual  marine  insurance  companies, 
there  shall  be  allowed,  in  addition  to  the  deductions  allowed 
in  paragraphs  (1)  to  (10)  (par.  149-138),  inclusive,  amounts 
repaid  to  policyholders  on  account  of  premiums  previously 
paid  by  them,  and  interest  paid  upon  such  amounts  between 
the  ascertainment  and  the  payment  thereof; 


(13)  In  the  case  of  mutual  insurance  companies  (other 
than  mutual  life  or  mutual  marine  insurance  companies) 
requiring  their  members  to  make  premium  deposits  to  provide 
for  losses  and  expenses,  there  shall  be  allowed,  in  addition  to 
the  deductions  allowed  in  paragraphs  (1)  to  (10)  (par.  149- 
158),  inclusive,  (unless  otherwise  allowed  under  such  para- 
graphs) the  amount  of  premium  deposits  returned  to  their  policyholders  and  the 
amount  of  premium  deposits  retained  for  the  payment  of  losses,  expenses,  and  rein- 
surance reserves ; 


161. 

Premium  deposits 
in  case  of  mutual  in- 
surance companies. 


(14)  (a)  At  the  time  of  filing  return  for  the  taxable 

year  1918  a taxpayer  may  file  a claim  in  abatement  based  on 
the  fact  that  he  has  sustained  a substantial  loss  (whether  or 
not  actually  realized  by  sale  or  other  disposition)  resulting 
from  any  material  reduction  (not  due  to  temporary  fluctu- 
ation) of  the  value  of  the  inventory  for  such  taxable  year,  or 
from  the  actual  payment  after  the  close  of  such  taxable  year 
of  rebates  in  pursuance  of  contracts  entered  into  during  such 
year  upon  sales  made  during  such  year.  In  such  case  payment  of  the  amount  of  the 
tax  covered  by  such  claim  shall  not  be  required  until  the  claim  is  decided,  but  the 
taxpayer  shall  accompany  his  claim  with  a bond  in  double  the  amount  of  the  tax 
covered  by  the  claim,  with  sureties  satisfactory  to  the  Commissioner,  conditioned 
for  the  payment  of  any  part  of  such  tax  found  to  be  due,  with  interest.  If  any  part 
of  such  claim  is  disallowed  then  the  remainder  of  the  tax  due  shall  on  notice  and 
demand  by  the  collector  be  paid  by  the  taxpayer  with  interest  at  the  rate  of  1 per 


162. 

Abatement  claim 
based  on  sub- 
stantial loss  sus- 
tained. In  inventory 
value  or  actual  pay- 
ment of  rebates. 


25 


eetitum  per  month  from  the  time  the  tax  would  have  been  due  had  no  such  claim 
been  filed.  If  it  is  shown  to  the  satisfaction  of  the  Commissioner  that  such  sub- 
stantial loss  has  been  sustained,  then  in  computing  the  taxes  imposed  by  this  title  and 
by  Title  III  the  amount  of  such  loss  shall  be  deducted  from  the  net  income,  (b)  If 
no  such  claim  is  filed,  but  it  is  shown  to  the  satisfaction  of  the  Commissioner  that  dur- 
ing the  taxable  year  1919  the  taxpayer  has  sustained  a substantial  loss  of  the  character 
above  described  then  the  amount  of  such  loss  shall  be  deducted  from  the  net  income 
for  the  taxable  year  1918  and  the  taxes  imposed  by  this  title  and  by  Title  III  for  such 
year  shall  be  redetermined  accordingly.  Any  amount  found  to  be  due  to  the  taypayer 
upon  the  basis  of  such  redetermination  shall  be  credited  or  refunded  to  the  taxpayer 
in  accordance  with  the  provisions  of  Section  252  (par.  195). 

(b)  In  the  case  of  a foreign  corporation  the  deductions 

163.  allowed  in  subdivision  (a)  (par.  148-162 ),  except  those 
Deductions  allowed  allowed  in  paragraph  (2),  (par.  150 ) and  in  clauses  (a),  (b), 

foreign  corporations,  and  (c)  of  paragraph  (3),  (par.  151 ),  shall  be  allowed  only  if 
and  to  the  extent  that  they  are  connected  with  income  arising 
from  a source  within  the  United  States ; and  the  proper  apportionment  and  allocation 
of  the  deductions  with  respect  to  sources  of  income  within  and  without  the  United 
States  shall  be  determined  under  rules  and  regulations  prescribed  by  the  Commissioner 
with  the  approval  of  the  Secretary. 

Items  Not  Deductible 

164.  Sec.  235.  That  in  computing  net  income  no  deduction  shall  in  any  case  be 
allowed  in  respect  of  any  of  the  items  specified  in  Section  215  (par.  75-79). 

Credits  Allowed 

165.  Sec.  236.  That  for  the  purpose  only  of  the  tax  imposed  by  Section  230  (par. 
124-127 ) there  shall  be  allowed  the  following  credits : 

(a)  The  amount  received  as  interest  upon  obligations  of 
the  United  States  and  bonds  issued  by  the.  War  Finance 
Corporation,  which  is  included  in  gross  income  under  Section 
233  (par.  144- 147)  ; 

(b)  The  amount  of  any  taxes  imposed  by  Title  III  for 
the  same  taxable  year : Provided,  That  in  the  case  of  a corpo- 
ration which  makes  return  for  a fiscal  year  beginning  in  1917 
and  ending  in  1918,  in  computing  the  tax  as  provided  in  sub- 
division (a)  of  Section  205  (par.  35-36),  the  tax  computed  for  the  entire  period  under 
Title  II  of  the  Revenue  Act  of  1917  shall  be  credited  against  the  net  income  computed 
for  the  entire  period  under  Title  I of  the  Revenue  Act  of  1916  as  amended  by  the 
Revenue  Act  of  1917  and  under  Title  I of  the  Revenue  Act  of  1917,  and  the  tax 
computed  for  the  entire  period  under  Title  III  of  this  Act  at  the  rates  prescribed  for 
the  calendar  year  1918  shall  be  credited  against  the  net  income  computed  for  the 
entire  period  under  this  title;  and 


166. 

Interest  included 
in  gross  income. 

167. 

Taxes  imposed  by 
Title  III. 


168. 

Domestic 

tion. 


corpora- 


(c)  In  the  case  of  a domestic  corporation,  $2,000. 


169. 

Tax  withheld  a t 
source  in  case  of 
foreign  corporations 
not  engaged  in  busi- 
ness or  having  offices 
in  U.  S. 


Payment  of  Tax  at  Source 

Sec.  237.  That  in  the  case  of  foreign  corporations  subject 
to  taxation  under  this  title  not  engaged  in  trade  or  business 
within  the  United  States  and  not  having  any  office  or  place 
of  business  therein,  there  shall  be  deducted  and  withheld  at 
the  source  in  the  same  manner  and  upon  the  same  items  of 
income  as  is  provided  in  Section  221  (par.  102-106)  a tax 
equal  to  10  per  centum  thereof,  and  such  tax  shall  be  re- 
turned and  paid  in  the  same  manner  and  subject  to  the  same  conditions  as  provided 
in  that  section : Provided,  That  in  the  case  of  interest  described  in  subdivision  (b) 
of  that  section  (par.  103)  the  deduction  and  withholding  shall  be  at  the  rate  of  2 
per  centum. 

Credit  for  Taxes 

170.  Sec.  238.  (a)  That  in  the  case  of  a domestic  corporation 

Domestic  corpora-  the  total  taxes  imposed  for  the  taxable  year  by  this  title  and 
tion  credited  with  by  Title  III  shall  be  credited  with  the  amount  of  any  income, 
foreign  taxes  paid.  war-profits  and  excess-profits  taxes  paid  during  the  taxable 

year  to  any  foreign  country,  upon  income  derived  from 
sources  therein,  or  to  any  possession  of  the  United  States. 

26 


171. 

If  accrued  taxes 
differ  from  credits 
claimed  or  if  refunds 
made  taxes  rede- 
termined by  Com- 
missioner. 


If  accrued  taxes  when  paid  differ  from  the  amounts 
claimed  as  credits  by  the  corporation,  or  if  any  tax  paid  is 
refunded  in  whole  or  in  part,  the  corporation  shall  at  once 
notify  the  Commissioner  who  shall  redetermine  the  amount 
of  the  taxes  due  under  this  title  and  under  Title  III  for  the 
year  or  years  affected,  and  the  amount  of  taxes  due  upon 
such  redetermination,  if  any,  shall  be  paid  by  the  corporation 
upon  notice  and  demand  by  the  collector,  or  the  amount  of 
taxes  overpaid,  if  any,  shall  be  credited  or  refunded  to  the  corporation  in  accordance 
with  the  provisions  of  Section  252  {par.  195).  In  the  case  of  such  a tax  accrued 
but  not  paid,  the  Commissioner  as  a condition  precedent  to  the  allowance  of  this 
credit  may  require  the  corporation  t©  give  a bond  with  sureties  satisfactory  to  and 
to  be  approved  by  him  in  such  penal  sum  as  he  may  require,  conditioned  for  the  pay- 
ment by  the  taxpayer  of  any  amount  of  taxes  found  due  upon  any  such  redeter- 
mination; and  the  bond  herein  prescribed  shall  contain  such  further  conditions  as  the 
Commissioner  may  require. 


172. 

Credit  allowed 
only  upon  satisfac- 
tory evidence. 

173. 

Proportioned  for 
fiscal  year. 


(b)  This  credit  shall  be  allowed  only  if  the  taxpayer 
furnishes  evidence  satisfactory  to  the  Commissioner  showing 
the  amount  of  income  derived  from  sources  within  such  for- 
eign country  or  such  possession  of  the  United  States,  as  the 
case  may  be,  and  all  other  information  necessary  for  the 
computation  of  such  credit. 

(c)  If  a domestic  corporation  makes  a return  for  a fiscal 
year  beginning  in  1917  and  ending  in  1918,  only  that  propor- 
tion of  this  credit  shall  be  allowed  which  the  part  of  such 
period  within  the  calendar  year  1918  bears  to  the  entire  period. 


Corporation  Returns 

Sec.  239.  That  every  corporation  subject  to  taxation 
under  this  title  and  every  personal  service  corporation  shall 
make  a return,  stating  specifically  the  items  of  its  gross  in- 
come and  the  deductions  and  credits  allowed  by  this  title. 
The  return  shall  be  sworn  to  by  the  president,  vice-president, 
or  other  principal  officer  and  by  the  treasurer  or  assistant 
treasurer.  If  any  foreign  corporation  has  no  office  or  place 
of  business  in  the  United  States  but  has  an  agent  in  the 
United  States,  the  return  shall  be  made  by  the  agent.  In 
cases  where  receivers,  trustees  in  bankruptcy,  or  assignees  are 
operating  the  property  or  business  of  corporations,  such  receivers,  trustees,  or  as- 
signees shall  make  returns  for  such  corporations  in  the  same  manner  and  form  as 
corporations  are  required  to  make  returns.  Any  tax  due  on  the  basis  of  such  returns 
made  by  receivers,  trustees,  or  assignees  shall  be  collected  in  the  same  manner  as  if 
collected  from  the  corporations  of  whose  business  or  property  they  have  custody  and 
contr®l. 


174. 

Corporations  t o 
make  returns  sworn 
to  by  proper  officers. 
Agents  for  foreign 
corporations. 

Receivers,  trustees 
or  assignees  to  make 
returns  and  pay  tax. 


175.  Returns  made  under  this  section  shall  be  subject  to  the  provisions  of  Sections 
226  (par.  119-126)  and  228  {par.  123). 


176. 

Returns  when  ac- 
counting  period 
changed. 


bears  to  twelve  months. 


Whqn  return  is  made  under  Section  226  {par.  119-120 ) 
the  credit  provided  in  subdivision  (c)  of  Section  236 
{par.  168 ) shall  be  reduced  to  an  amount  which  bears  the 
same  ratio  to  the  full  credit  therein  provided  as  the  num- 
ber of  months  in  the  period  for  which  such  return  is  made 


Consolidated  Returns 


177.  Sec.  240.  (a)  That  corporations  which  are  affiliated 

Consolidated  re-  within  the  meaning  of  this  section  shall,  under  regulations 
turns  by  affiliated  to  be  prescribed  by  the  Commissioner  with  the  approval 
corporations.  of  the  Secretary,  make  a consolidated  return  of  net  income 

and  invested  capital  for  the  purposes  of  this  title  and 
Title  III,  and  the  taxes  thereunder  shall  be  computed  and  determined  upon  the 
basis  of  such  return:  Provided,  That  there  shall  be  taken  out  of  such  consoli- 
dated net  income  and  invested  capital,  the  net  income  and  invested  capital  of  any 
such  affiliated  corporation  organized  after  August  1,  1914,  and  not  successor  to  a 
then  existing  business,  50  per  centum  or  more  of  whose  gross  income  consists  of 

Z7 


gains,  profits,  commissions,  or  other  income,  derived  from  a Government  contract 
or  contracts  made  between  April  6,  1917,  and  November  11,  1918,  both  dates  inclu- 
sive. In  such  case  the  corporation  so  taken  out  shall  be  separately  assessed  on 
the  basis  of  its  own  invested  capital  and  net  income  and  the  remainder  of  such 
affiliated  group  shall  be  assessed  on  the  basis  of  the  remaining  consolidated 
invested  capital  and  net  income. 


In  any  case  in  which  a tax  is  assessed  upon  the  basis 
of  a consolidated  return,  the  total  tax  shall  be  computed 
in  the  first  instance  as  a unit  and  shall  then  be  assessed 
upon  the  respective  affiliated  corporations  in  such  propor- 
tions as  may  be  agreed  upon  among  them,  or,  in  the 
absence  of  any  such  agreement,  then  on  the  basis  of  the 
net  income  properly  assignable  to  each.  There  shall  be 
allowed  in  computing  the  income  tax  only  one  specific  credit  of  $2,000  (as  pro- 
vided in  Section  236)  (par.  168 ) ; in  computing  the  war-profits  credit  (as  provided 
in  Section  311)  (par.  232-242 ) only  one  specific  exemption  of  $3,000;  and  in  com- 
puting the  excess-profits  credit  (as  provided  in  Section  312)  (par.  243 ) only  one 
specific  exemption  of  $3,000. 


178. 

Total  tax  computed 
as  a unit  and  assessed 
upon  respective  corp. 
One  specific  credit  or 
exemption  allowed. 


(b)  For  the  purpose  of  this  section  two  or  more 
deemed  af  domestic  corporations  shall  be  deemed  to  be  affiliated  (1) 
if  one  corporation  owns  directly  or  controls  through  closely 
affiliated  interests  or  by  a nominee  or  nominees  substan- 
tially all  the  stock  of  the  other  or  others,  or  (2)  if  substantially  all  the  stock  of 
two  or  more  corporations  is  owned  or  controlled  by  the  same  interests. 


179. 

When 

filiated. 


(c)  For  the  purposes  of  Section  238  (par.  170-173)  a 
domestic  corporation  which  owns  a majority  of  the  voting 
stock  of  a foreign  corporation  shall  be  deemed  to  have 
paid  the  same  proportion  of  any  income,  war-profits  and 
excess-profits  taxes  paid  (but  not  including  taxes  accrued) 
by  such  foreign  corporation  during  the  taxable  year  to 
any  foreign  country  or  to  any  possession  of  the  United  States  upon  income  derived 
from  sources  without  the  United  States,  which  the  amount  of  any  dividends  (not 
deductible  under  Section  234)  (par.  154 ) received  by  such  domestic  corporation 
from  such  foreign  corporation  during  the  taxable  year  bears  to  the  total  taxable 
income  of  such  foreign  corporation  upon  or  with  respect  to  which  such  taxes  were 
paid:  Provided,  That  in  no  such  case  shall  the  amount  of  the  credit  for  such  taxes 
exceed  the  amount  of  such  dividends  (not  deductible  under  Section  234)  (par.  154) 
received  by  such  domestic  corporation  during  the  taxable  year. 


180. 

Credit  for  foreign 
paid  taxes.  Not  to 
exceed  dividends  re- 
ceived. 


Time  and  Place  for  Filing  Returns 

181.  Sec.  241.  (a)  That  returns  of  corporations  shall  be  made  at  the  same 

time  as  is  provided  in  subdivision  (a)  of  Section  227  (par.  121 ). 

182.  (b)  Returns  shall  be  made  to  the  collector  of  the  district  in  which  is 

located  the  principal  place  of  business  or  principal  office  or  agency  of  the  cor- 

poration, or,  if  it  has  no  principal  place  of  business  or  principal  office  or  agency 
in  the  United  States,  then  to  the  collector  at  Baltimore,  Maryland. 


PART  IV.— ADMINISTRATIVE  PROVISIONS 


183. 

Except  as  to  pay- 
ment of  tax  at  source, 
tax  to  be  paid  in  four 
installments. 


Payment  of  Taxes 

Sec.  250.  (a)  That  except  as  otherwise  provided  in 

this  section  and  Sections  221  (par.  102-106)  and  237 
(par.  169 ) the  tax  shall  be  paid  in  four  installments,  each 
consisting  of  one-fourth  of  the  total  amount  of  the  tax. 
The  first  installment  shall  be  paid  at  the  time  fixed  by  law 
for  filing  the  return,  and  the  second  installment  shall  be 
paid  on  the  fifteenth  day  of  the  third  month,  the  third  installment  on  the  fifteenth 
day  of  the  sixth  month,  and  the  fourth  installment  on  the  fifteenth  day  of  the 
ninth  month,  after  the  time  fixed  by  law  for  filing  the  return.  Where  an  exten- 
sion of  time  for  filing  a return  is  granted  the  time  for  payment  of  the  first  install- 
ment shall  be  postponed  until  the  date  of  the  expiration  of  the  period  of  the  exten- 
sion, but  the  time  for  payment  of  the  other  installments  shall  not  be  postponed 
unless  the  Commissioner  so  provides  in  granting  the  extension.  In  any  case  in 
which  the  time  for  the  payment  of  any  installment  is  at  the  reques  of  the  tax- 

28 


payer  thus  postponed,  there  shall  be  added  as  part  of  such  installment  interest 
thereon  at  the  rate  of  of  1 per  centum  per  month  from  the  time  it  would  have 
been  due  if  no  extension  had  been  granted,  until  paid.  If  any  installment  is  not 
paid  when  due,  the  whole  amount  of  the  tax  unpaid  shall  become  due  and  payable 
upon  notice  and  demand  by  the  collector. 

lg4  The  tax  may  at  the  option  of  the  taxpayer  be  paid  in 

1 q.  * . „ a single  payment  instead  of  in  installments,  in  which  case 

dingle  payment  at  t^e  total  amount  shall  be  paid  on  or  before  the  time  fixed 
option  ot  taxpayer.  by  jaw  for  ^jjng  the  return,  or,  where  an  extension  of  time 
for  filing  the  return  has  been  granted,  on  or  before  the  expiration  of  the  period 

(b)  As  soon  as  practicable  after  the  return  is  filed, 
the  Commissioner  shall  examine  it.  If  it  then  appears  that 
the  correct  amount  of  the  tax  is  greater  or  less  than  that 
shown  in  the  return,  the  installments  shall  be  recomputed. 
If  the  amount  already  paid  exceeds  that  which  should  have 
been  paid  on  the  basis  of  the  installments  as  recomputed, 
the  excess  so  paid  shall  be  credited  against  the  subsequent  installments;  and  if 
the  amount  already  paid  exceeds  the  correct  amount  of  the  tax,  the  excess  shall  be 
credited  or  refunded  to  the  taxpayer  in  accordance  with  the  provisions  of  Section 
252  (par.  195). 


of  such  extension. 

185. 

Returns  examined 
and  adjustment  of 
taxes  made  if  neces- 
sary. 


186. 

If  amount  paid  is 
less  than  due,  bal- 
ance to  be  paid  upon 
notice.  Penalty  for 
understatement  due 
to  negligence. 


If  the  amount  already  paid  is  less  than  that  which 
should  have  been  paid,  the  difference  shall,  to  the  extent 
not  covered  by  any  credits  then  due  to  the  taxpayer  under 
Section  252  (par.  195),  be  paid  upon  notice  and  demand  by 
the  collector.  In  such  case  if  the  return  is  made  in  good 
faith  and  the  understatement  of  the  amount  in  the  return 
is  not  due  to  any  fault  of  the  taxpayer,  there  shall  be  no 
penalty  because  of  such  understatement.  If  the  under- 
statement is  due  to  negligence  on  the  part  of  the  taxpayer,  but  without  intent  to 
defraud,  there  shall  be  added  as  part  of  the  tax  5 per  centum  of  the  total  amount 
of  the  deficiency,  plus  interest  at  the  rate  of  1 per  centum  per  month  on  the 
amount  of  the  deficiency  of  each  installment  from  the  time  the  installment  was  due. 

If  the  understatement  is  false  or  fraudulent  with  intent 
to  evade  the  tax,  then,  in  lieu  of  the  penalty  provided  by 
* Section  3176  of  the  Revised  Statutes  (par.  675 ),  as  amended, 
u ae  statement.  for  fajse  or  fraudulent  returns  willfully  made,  but  in  addi- 

tion to  other  penalties  provided  by  law  for  false  or  fraudulent  returns,  there  shall 
be  added  as  part  of  the  tax  50  per  centum  of  the  amount  of  the  deficiency. 


(c)  If  the  return  is  made  pursuant  to  section  3176  of 
the  Revised  Statutes  (par.  673-676 ) as  amended,  the  amount 
of  tax  determined  to  be  due  under  such  return  shall  be  paid 
upon  notice  and  demand  by  the  collector. 

(d)  Except  in  the  case  of  false  or  fraudulent  returns 
with  intent  to  evade  the  tax,  the  amount  of  tax  due  under 
any  return  shall  be  determined  and  assessed  by  the  Com- 
missioner within  five  years  after  the  return  was  due  or  was 
made,  and  no  suit  or  proceeding  for  the  collection  of  any 

tax  shall  be  begun  after  the  expiration  of  five  years  after  the  date  when  the  return 
was  due  or  was  made.  In  the  case  of  such  false  or  fraudulent  returns,  the  amount 
of  tax  due  may  be  determined  at  any  time  after  the  return  is  filed,  and  the  tax 
may  be  collected  at  any  time  after  it  becomes  due. 

jqq  (e)  If  any  tax  remains  unpaid  after  the  date  when  it  is 

Penalties  for  un  due,  an<*  *or  ten  days  a^ter  notice  and  demand  by  the  col- 
naid  ta  es  " ^ector»  then,  except  in  the  case  of  estates  of  insane, 

p x * deceased,  or  insolvent  persons,  there  shall  be  added  as  part 

of  the  tax  the  sum  of  5 per  centum  on  the  amount  due  but  unpaid,  plus  interest 
at  the  rate  of  1 per  centum  per  month  upon  such  amount  from  the  time  it  became 
due:  Provided,  That  as  to  any  such  amount  which  is  the  subject  of  a bona  fide 
claim  for  abatement  such  sum  of  5 per  centum  shall  not  be  added  and  the  interest 
from  the  time  the  amount  was  due  until  the  claim  is  decided  shall  be  at  the  rate 
of  l/2  of  1 per  centum  per  month. 


188. 

Returns  made  by 
collectors. 

189. 

Proceedings  for  col- 
lection of  taxes  to  be 
made  within  5 years. 


29 


191. 

Instructions  on  re- 
turn sufficient  notice 
and  demand. 


sufficient  notice  of  the  amount  due. 


In  the  ease  of  the  first  installment  provided  for  in 
Sub-division  (a)  (par.  183 ) the  instructions  printed  on  the 
return  shall  be  deemed  sufficient  notice  of  the  date  when 
the  tax  is  due  and  sufficient  demand,  and  the  taxpayer’s 
computation  of  the  tax  on  the  return  shall  be  deemed 


192. 

If  warrant  of  dis- 
traint served. 


(f)  In  any  case  in  which  in  order  to  enforce  payment 
of  a tax  it  is  necessary  for  a collector  to  cause  a warrant 
of  distraint  to  be  served,  there  shall  also  be  added  as 
part  of  the  tax  the  sum  of  $5. 


193. 

Where  taxpayer 
designs  to  evade  the 
tax  by  sudden  de- 
parture from  U.  S.  or 
removal  or  conceal- 
ment of  his  property, 
Commissioner  to  take 
summary  proceedings 
for  its  collection. 


(g)  If  the  Commissioner  finds  that  a taxpayer  designs 
quickly  to  depart  from  the  United  States  or  to  remove 
his  property  therefrom,  or  to  conceal  himself  or  his  prop- 
erty therein,  or  to  do  any  other  act  tending  to  prejudice 
or  to  render  wholly  or  partly  ineffectual  proceedings  to 
collect  the  tax  for  the  taxable  year  then  last  past  or  the 
taxable  year  then  current  unless  such  proceedings  be 
brought  without  delay,  the  Commissioner  shall  declare 
the  taxable  period  for  such  taxpayer  terminated  at  the 
end  of  the  calendar  month  then  last  past  and  shall  cause 
notice  of  such  finding  and  declaration  to  be  given  the 
taxpayer,  together  with  a demand  for  immediate  payment  of  the  tax  for  the  taxable 
period  so  declared  terminated  and  of  the  tax  for  the  preceding  taxable  year  or 
so  much  of  said  tax  as  is  unpaid,  whether  or  not  the  time  otherwise  allowed 
by  law  for  filing  return  and  paying  the  tax  has  expired;  and  such  taxes  shall 
thereupon  become  immediately  due  and  payable.  In  any  action  or  suit  brought 
to  enforce  payment  of  taxes  made  due  and  payable  by  virtue  of  the  provisions 
of  this  subdivision  the  finding  of  the  Commissioner,  made  as  herein  provided, 
whether  made  after  notice  to  the  taxpayer  or  not,  shall  be  for  all  purposes 
presumptive  evidence  of  the  taxpayer’s  design.  A taxpayer  who  is  not  in  default 
in  making  any  return  or  paying  income,  war-profits,  or  excess-profits  tax  under 
any  Act  of  Congress  may  furnish  to  the  United  States,  under  regulations  to  be 
prescribed  by  the  Commissioner  with  the  approval  of  the  Secretary,  security 
approved  by  the  Commissioner  that  he  will  duly  make  the  return  next  there- 
after required  to  be  filed  and  pay  the  tax  next  thereafter  required  to  be  paid. 
The  Commissioner  may  approve  and  accept  in  like  manner  security  for  return 
and  payment  of  taxes  made  due  and  payable  by  virtue  of  the  provisions  of  this 
subdivision,  provided  the  taxpayer  has  paid  in  full  all  other  income,  war-profits, 
or  excess-profits  taxes  due  from  him  under  any  Act  of  Congress.  If  security  is 
approved  and  accepted  pursuant  to  the  provisions  of  this  subdivision  and  such 
further  or  other  security  with  respect  to  the  tax  or  taxes  covered  thereby  is 
given  as  the  Commissioner  shall  from  time  to  time  find  necessary  and  require, 
payment  of  such  taxes  shall  not  be  enforced  by  any  proceedings  under  the 
provisions  of  this  subdivision  prior  to  the  expiration  of  the  time  otherwise 
allowed  for  paying  such  respective  taxes. 

Receipts  for  Taxes 

Sec.  251.  That  every  collector  to  whom  any  pay- 
ment of  any  tax  is  made  under  the  provisions  of  this 
title  shall  upon  request  give  to  the  person  making  such 
payment  a full  written  or  printed  receipt,  stating  the 
amount  paid  and  the  particular  account  for  which  such 
payment  was  made;  and  whenever  any  debtor  pays  taxes 
on  account  of  payments  made  or  to  be  made  by  him  to 
separate  creditors  the  collector  shall,  if  requested  by  such 
debtor,  give  a separate  receipt  for  the  tax  paid  on  account 
of  each  creditor  in  such  form  that  the  debtor  can  con- 
veniently produce  such  receipts  separately  to  his  several 
creditors  in  satisfaction  of  their  respective  demands  up  to  the  amounts  stated 
in  the  receipts;  and  such  receipt  shall  be  sufficient  evidence  in  favor  of  such 
debtor  to  justify  him  in  withholding  from  his  next  payment  to  his  creditor  the 
amount  therein  stated;  but  the  creditor  may,  upon  giving  to  his  debtor  a full 
written  receipt  acknowledging  the  payment  to  him  of  any  sum  actually  paid 
and  accepting  the  amount  of  tax  paid  as  aforesaid  (specifying  the  same)  as  a 
further  satisfaction  of  the  debt  to  that  amount,  require  the  surrender  to  him 
of  such  collector’s  receipt. 

JO 


194. 

Collector  upon  re- 
quest to  give  receipt 
for  taxes  and  sep- 
arate receipt  for  each 
creditor,  which  suf- 
ficient evidence  to 
withhold  amount 
from  next  payment 
to  creditor. 


m. 

Refunds  of  any  re- 
turn of  income,  ex- 
cess or  war  profits 
taxes  paid  in  excess 
of  those  due,  if  claim 
made  within  5 years. 


Rmmcs 

Sec.  252.  That  if,  upon  examination  of  any  retufii  ot 
income  made  pursuant  to  this  Act,  the  Act  of  August  5, 
1909,  entitled  “An  Act  to  provide  revenue,  equalize  duties, 
and  encourage  the  industries  of  the  United  States,  and 
for  other  purposes,”  the  Act  of  October  3,  1913,  entitled 
“An  Act  to  reduce  tariff  duties  and  to  provide  revenue 
for  the  Government,  and  for  other  purposes,”  the  Reve- 
nue Act  of  1916,  as  amended,  or  the  Revenue  Act  of  1917, 
it  appears  that  an  amount  of  income,  war-profits  or  excess-profits  tax  has  been 
paid  in  excess  of  that  properly  due,  then,  notwithstanding  the  provisions  of 
Section  3228  of  the  Revised  Statutes,  the  amount  of  the  excess  shall  be  credited 
against  any  income,  war-profits  or  excess-profits  taxes,  or  installment  thereof, 
then  due  from  the  taxpayer  under  any  other  return,  and  any  balance  of  such 
excess  shall  be  immediately  refunded  to  the  taxpayer:  Provided,  That  no  such 
credit  or  refund  shall  be  allowed  or  made  after  five  years  from  the  date  when 
the  return  was  due,  unless  before  the  expiration  of  such  five  years  a claim 
therefor  is  filed  by  the  taxpayer. 

Penalties 

Sec.  253.  That  any  individual,  corporation,  or  part- 
nership required  under  this  title  to  pay  or  collect  any 
tax,  to  make  a return  or  to  supply  information,  who  fails 
to  pay  or  collect  such  tax,  to  make  such  return,  or  to 
supply  such  information  at  the  time  or  times  required 
under  this  title,  shall  be  liable  to  a penalty  of  not  more 

than  $1,000.  Any  individual,  corporation,  or  partnership,  or  any  officer  or 

employee  of  any  corporation  or  member  or  employee  of  a partnership,  who 
willfully  refuses  to  pay  or  collect  such  tax,  to  make  such  return,  or  to  supply 

such  information  at  the  time  or  times  required  under  this  title,  or  who  willfully 

attempts  in  any  manner  to  defeat  or  evade  the  tax  imposed  by  this  title,  shall 
be  guilty  of  a misdemeanor  and  shall  be  fined  not  more  than  $10,000  or  imprisoned 
for  not  more  than  one  year,  or  both,  together  with  the  costs  of  prosecution. 


196. 

Failure  or  refusal 
to  pay  or  collect  tax, 
make  return  or  sup- 
ply information. 


Returns  of  Payments  of  Dividends 

197.  Sec.  254.  That  every  corporation  subject  to  the  tax  imposed  by  this  title 
and  every  personal  service  corporation  shall,  when  required  by  the  Commissioner, 
render  a correct  return  duly  verified  under  oath,  of  its  payments  of  dividends, 
stating  the  name  and  address  of  each  stockholder,  the  number  of  shares  owned 
by  him,  and  the  amount  of  dividends  paid  to  him. 

Returns  of  Brokers 

Sec.  255.  That  every  individual,  corporation,  or  part- 
nership doing  business  as  a broker  shall,  when  required 
by  the  Commissioner,  render  a correct  return  duly  veri- 
fied under  oath,  under  such  rules  and  regulations  as  the 
Commissioner,  with  the  approval  of  the  Secretary,  may 
prescribe,  showing  the  names  of  customers  for  whom 
such  individual,  corporation,  or  partnership  has  transacted  any  business,  with 
such  details  as  to  the  profits,  losses,  or  other  information  which  the  Com- 
missioner may  require,  as  to  each  of  such  customers,  as  will  enable  the  Com- 
missioner to  determine  whether  all  income  tax  due  on  profits  or  gains  of  such 
customers  has  been  paid. 

Information  at  Source 

Sec.  256.  That  all  individuals,  corporations,  and  part- 
nerships, in  whatever  capacity  acting,  including  lessees  or 
mortgagors  of  real  or  personal  property,  fiduciaries,  and 
employers,  making  payment  to  another  individual,  cor- 
poration, or  partnership,  of  interest,  rent,  salaries,  wages, 
premiums,  annuities,  compensations,  remunerations,  emolu- 
ments, or  other  fixed,  or  determinable  gains,  profits,  and 
income  (other  than  paym'ents  described  in  Sections  254 
and  255  {par.  197-198),  of  $1,000  or  more  in  any  taxable 
year,  or,  in  the  case  of  such  payments  made  by  the  United 
States,  the  officers  or  employees  of  the  United  States  having  information  as  to  such 

n 


199. 

Persons  making 
payments  of  fixed  or 
determinable  gains, 
profits  and  income  of 
$1,000  or  more  to 
make  returns  to  Com- 
missioner setting 
forth  details  thereof. 


198. 

Brokers  returns 
showing  names  of 
customers,  and  de- 
tailed information. 


payments  and  required  to  make  returns  in  regard  thereto  by  the  regulations 
hereinafter  provided  for,  shall  render  a true  and  accurate  return  to  the  Com- 
missioner, under  such  regulations  and  in  such  form  and  manner  and  to  such 
extent  as  may  be  prescribed  by  him  with  the  approval  of  the  Secretary,  setting 
forth  the  amount  of  such  gains,  profits,  and  income,  and  the  name  and  address 
of  the  recipient  of  such  payment. 


Such  returns  may  be  required,  regardless  of  amounts, 
(1)  in  the  case  of  payments  of  interest  upon  bonds, 
mortgages,  deeds  of  trust,  or  other  similar  obligations  of 
corporations,  and  (2)  in  the  case  of  collections  of  items 
(not  payable  in  the  United  States)  of  interest  upon  the 
bonds  of  foreign  countries  and  interest  upon  the  bonds  of 
and  dividends  from  foreign  corporations  by  individuals, 
corporations,  or  partnerships,  undertaking  as  a matter  of 
business  or  for  profit  the  collection  of  foreign  payments  of 
such  interest  or  dividends  by  means  of  coupons,  checks,  or  bills  of  exchange. 


200. 

Regardless  of 
amount  returns  may 
be  required  of  pay- 
ments of  interest  on 
corporations’  obliga- 
tions and  collection 
of  foreign  items. 


201. 

Names  and  ad- 
dresses may  be  de- 
manded. 


When  necessary  to  make  effective  the  provisions  of 
this  section  the  name  and  address  of  the  recipient  of 
income  shall  be  furnished  upon  demand  of  the  individual, 
corporation,  or  partnership  paying  the  income. 


202. 

Obligations  of  U. 
S.  not  affected. 


The  provisions  of  this  section  shall  apply  to  the  calen- 
dar year  1918  and  each  calendar  year  thereafter,  but  shall 
not  apply  to  the  payment  of  interest  on  obligations  of  the 
United  States. 


203. 

Open  to  inspection 
only  on  order  of 
President.  State  of- 
ficials by  request  of 
Governor.  Bona  fide 
stockholders. 
Penalty  for  dis- 
closures. 


Returns  to  be  Public  Records 

Sec.  257.  That  returns  upon  which  the  tax  has  been 
determined  by  the  Commissioner  shall  constitute  public 
records;  but  they  shall  be  open  to  inspection  only  upon 
order  of  the  President  and  under  rules  and  regulations 
prescribed  by  the  Secretary  and  approved  by  the  Presi- 
dent: Provided,  That  the  proper  officers  of  any  State 
imposing  an  income  tax  may,  upon  the  request  of  the 
governor  thereof,  have  access  to  the  returns  of  any  cor- 
poration, or  to  an  abstract  thereof  showing  the  name 
and  income  of  the  corporation,  at  such  times  and  in  such 
manner  as  the  Secretary  may  prescribe:  Provided  further,  That  all  bona  fide 
stockholders  of  record  owning  1 per  centum  or  more  of  the  outstanding  stock 
of  any  corporation  shall,  upon  making  request  of  the  Commissioner,  be  allowed 
to  examine  the  annual  income  returns  of  such  corporation  and  of  its  sub- 
sidiaries. Any  stockholder  who  pursuant  to  the  provisions  of  this  section  is 
allowed  to  examine  the  return  of  any  corporation,  and  who  makes  known  in 
any  manner  whatever  not  provided  by  law  the  amount  or  source  of  income, 
profits,  losses,  expenditures,  or  any  particular  thereof,  set  forth  or  disclosed  in 
any  such  return,  shall  be  guilty  of  a misdemeanor  and  be  punished  by  a fine 
not  exceeding  $1,000,  or  by  imprisonment  not  exceeding  one  year,  or  both. 


204  The  Commissioner  shall  as  soon  as  practicable  in  each 

Z T ‘ f f • j-  -j  1 year  cause  to  be  prepared  and  made  available  to  public 

.Lusts  ot  individuals  inspecti0n  in  such  manner  as  he  may  determine,  in  the 
maKing  returns.  office  of  the  collector  in  each  Internal-Revenue  District 

and  in  such  other  places  as  he  may  determine,  lists  containing  the  names 
and  the  post-office  addresses  of  all  individuals  making  income-tax  returns  in 
such  district. 

Publication  of  Statistics 


205.  Sec.  258.  That  the  Commissioner,  with  the  approval 

Statistics  to  be  pub-  of  the  Secretary,  shall  prepare  and  publish  annually  sta- 
lished  annually.  tistics  reasonably  available  with  respect  to  the  operation 

of  the  income,  war-profits  and  excess-profits  tax  laws, 
including  classifications  of  taxpayers  and  of  income,  the  amounts  allowed  as 
deductions,  exemptions,  and  credits,  and  any  other  facts  deemed  pertinent  and 
valuable. 


32 


206. 

Licenses  required 
for  collection  of 
foreign  payments  of 
interest  or  dividends. 


Collection  op  Foreign  Items 
Sec.  259.  That  all  individuals,  corporations,  or  part- 
nerships undertaking  as  a matter  of  business  or  for  profit 
the  collection  of  foreign  payments  of  interest  or  dividends 
by  means  of  coupons,  checks,  or  bills  of  exchange  shall 
obtain  a license  from  the  Commissioner  and  shall  be  sub- 
ject to  such  regulations  enabling  the  Government  to  obtain 
the  information  required  under  this  title  as  the'  Commissioner,  with  the  approval 
of  the  Secretary,  shall  prescribe;  and  whoever  knowingly  undertakes  to  collect 
such  payments  without  having  obtained  a license  therefor,  or  without  complying 
with  such  regulations,  shall  be  guilty  of  a misdemeanor  and  shall  be  fined  not 
more  than  $5,000,  or  imprisoned  for  not  more  than  one  year,  or  both. 

Citizens  of  United  States  Possessions 


207.  Sec.  260.  That  any  individual  who  is  a citizen  of  any 

Taxed  on  income  possession  of  the  United  States  (but  not  otherwise  a citi- 
from  sources  in  U.  S.  zen  of  the  United  States)  and  who  is  not  a resident  of  the 
United  States,  shall  be  subject  to  taxation  under  this 
title  only  as  to  income  derived  from  sources  within  the  United  States,  and  in 
such  case  the  tax  shall  be  computed  and  paid  in  the  same  manner  and  subject  to 
the  same  conditions  as  in  the  case  of  other  persons  who  are  taxable  only  as  to 
income  derived  from  such  sources. 


208. 

Act  of  1916  as 
amended  applies. 


Porto  Rico  and  Philippine  Islands 

Sec.  261.  That  in  Porto  Rico  and  the  Philippine 
Islands  the  income  tax  shall  be  levied,  assessed,  collected, 
and  paid  in  accordance  with  the  provisions  of  the  Revenue 
Act  of  1916  as  amended. 


209.  Returns  shall  be  made  and  taxes  shall  be  paid  under 

Returns  made  and  Title  I of  such  Act  in  Porto  Rico  or  the  Philippine  Islands, 
taxes  paid  in  P.  R.  as  the  case  may  be,  by  (1)  every  individual  who  is  a citi- 
& P.  I.  zen  or  resident  of  Porto  Rico  or  the  Philippine  Islands  or 

derives  income  from  sources  therein,  and  (2)  every  cor- 
poration created  or  organized  in  Porto  Rico  or  the  Philippine  Islands  or  deriving 
income  from  sources  therein.  $.n  individual  who  is  neither  a citizen  nor  a resi- 
dent of  Porto  Rico  or  the  Philippine  Islands  but  derives  income  from  sources 
therein,  shall  be  taxed  in  Porto  Rico  or  the  Philippine  Islands  as  a nonresident 
alien  individual,  and  a corporation  created  or  organized  outside  Porto  Rico  or 
the  Philippine  Islands  and  deriving  income  from  sources  therein  shall  be  taxed 
in  Porto  Rico  or  the  Philippine  Islands  as  a foreign  corporation.  For  the  pur- 
poses of  Section  216  (par.  80-85),  and  of  paragraph  (6)  of  subdivision  (a)  of  Sec- 
tion 234  (par.  154 ),  a tax  imposed  in  Porto  Rico  or  the  Philippine  Islands  upon 
the  net  income  of  a corporation  shall  not  be  deemed  to  be  a tax  under  this  title. 

The  Porto  Rican  or  Philippine  Legislature  shall  have 
power  by  due  enactment  to  amend,  alter,  modify,  or  repeal 
the  income  tax  laws  in  force  in  Porto  Rico  or  the  Philip- 
pine Islands,  respectively. 


210. 

Power  of  respective 
legislature^ 


TITLE  III.— WAR-PROFITS  AND  EXCESS-PROFITS  TAX 

PART  I.— GENERAL  DEFINITIONS 

211.  Sec.  300.  That  when  used  in  this  title  the  terms 

Definitions  same  as  “taxable  year,”  “fiscal  year,”  “personal  service  corpora- 
fcr  income  tax  pur-  tion,”  “paid  or  accrued,”  and  “dividends”  shall  have  the 
poses.  same  meaning  as  provided  for  the  purposes  of  income 

tax  in  Sections  200  and  201  (par.  16,  19-21).  The  first 

taxable  year  for  the  purposes  of  this  title  shall  be  the  same  as  the  first  taxable 
year  for  the  purposes  of  the  income  tax  under  Title  II. 


PART  II.— IMPOSITION  OF  TAX 

212.  Sec.  301.  (a)  That  in  lieu  of  the  tax  imposed  by  Title 

Tax  in  addition  to  II  of  the  Revenue  Act  of  1917*,  but  in  addition  to  the 

*The  following  rates  applied  on  amount  of  net  income  of  every  corporation,  partnership  or  indi- 
vidual in  excess  of  deduction  allowed  and  not  in  excess  of  15%  of  invested  capital  for  taxable  year, 
20%;  in  excess  of  15%  and  not  over  20%,  25%;  in  excess  of  20%  and  not  over  25%,  35%;  in 
excess  of  25%  and  not  over  33%,  45%;  and  in  excess  of  33%  of  such  invested  capital,  60%.  In 
case  of  trade  or  business,  including  professions  and  occupations,  having  no  invested  capital  or  only 
a nominal  capital,  8%  on  amount  of  net  income  in  excess  of  deduction  allowed. 


33 


other  taxes.  Rates  other  taxes  imposed  by  this  Act,  there  shall  be  levied,  col- 
for  taxable  year  lected,  and  paid  for  the  taxable  year  1918  upon  the  net 
1918 — sum  of  income  of  every  corporation  a tax  equal  to  the  sum  of 

the  following: 


First  Bracket 


213.  30  per  centum  of  the  amount  of  the  net  income  in  excess  of  the  excess- 
profits  credit  (determined  under  Section  312)  {par.  243-244 ) and  not  in  excess  of 
20  per  centum  of  the  invested  capital; 

Second  Bracket 

214.  65  per  centum  of  the  amount  of  the  net  income  in  excess  of  20  per  centum 
of  the  invested  capital; 

Third  Bracket 


215.  The  sum,  if  any,  by  which  80  per  centum  of  the  amount  of  the  net  income 
in  excess  of  the  war-profits  credit  (determined  under  Section  311)  {par.  232-242 ) 
exceeds  the  amount  of  the  tax  computed  under  the  first  and  second  brackets. 

(b)  For  the  taxable  year  1919  and  each  taxable  year 
thereafter  there  shall  be  levied,  collected,  and  paid  upon 
the  net  income  of  every  corporation  (except  corporations 
taxable  under  subdivision  (c)  {par.  219-222)  of  this  section) 
a tax  equal  to  the  sum  of  the  following: 


216. 

Rates  for  taxable 
year  1919  and  there- 
after— sum  of 


First  Bracket 

217.  20  per  centum  of  the  amount  of  the  net  income  in  excess  of  the  excess- 

profits  credit  (determined  under  Section  312)  {par.  243-244 ) and  not  in  excess  of 
20  per  centum  of  the  invested  capital : 

Second  Bracket 


218.  40  per  centum  of  the  amount  of  the  net  income  in  excess  of  20  per  centum 

of  the  invested  capital. 


219. 

Where  net  income 
over  $10,000,  from 
any  government  con- 
tract  or  contracts 
made  between  4-6-17 
and  11-11-18. 

220. 

Rates  on  income 
attributable  to  such 
contracts. 

221. 

Rates  on  other  in- 
come. 


(c)  For  the  taxable  year  1919  and  each  taxable  year 
thereafter  there  shall  be  levied,  collected,  and  paid  upon 
the  net  income  of  every  corporation  which  derives  in  such 
year  a net  income  of  more  than  $10,000  from  any  Govern- 
ment contract  or  contracts  made  between  April  6,  1917,  and 
November  11,  1918,  both  dates  inclusive,  a tax  equal  to  the 
sum  of  the  following: 

(1)  Such  a portion  of  a tax  computed  at  the  rates 
specified  in  subdivision  (a)  {par.  212-213)  as  the  part  of  the 
net  income  attributable  to  such  Government  contract  or 
contracts  bears  to  the  entire  net  income.  In  computing 
such  tax  the  excess-profits  credit  and  the  war-profits  credit 
applicable  to  the  taxable  year  shall  be  used; 

(2)  Such  a portion  of  a tax  computed  at  the  rates 
specified  in  subdivision  (b)  {par.  216-218)  as  the  part  of  the 
net  income  not  attributable  to  such  Government  contract 
or  contracts  bears  to  the  entire  net  income. 


For  the  purpose  of  determining  the  part  of  the  net 
income  attributable  to  such  Government  contract  or  con- 
tracts, the  proper  apportionment  and  allocation  of  the 
deductions  with  respect  to  gross  income  derived  from  such 
Government  contract  or  contracts  and  from  other  sources, 
respectively,  shall  be  determined  under  rules  and  regula- 
tions prescribed  by  the  Commissioner  with  the  approval  of  the  Secretary. 

(d)  In  any  case  where  the  full  amount  of  the  excess- 
n r profits  credit  is  not  allowed  under  the  first  bracket  of  sub- 

ull  amount  ot  division  (aj  or  (b)  {par.  213,  217),  by  reason  of  the  fact 
that  such  credit  is  in  excess  of  20  per  centum  of  the 
the  part  not  so  allowed  shall  be  deducted  from  the  amount  in  the 


222. 

Determination  o f 
net  income  attrib- 
utable to  such  con- 
tracts. 


credit  allowed. 


invested  capital, 
second  bracket. 


der 


(e)  For  the  purposes  of  the  Act  approved  March  21, 
1918,  entitled  “An  Act  to  provide  for  the  operation  of 
transportation  systems  while  under  Federal  control,  for 
the  just  compensation  of  their  owners  and  for  other  pur- 
poses,” the  tax  imposed  by  this  title  shall  be  treated  as  levied  by  an  Act  in  amend- 
ment of  Title  II  of  the  Revenue  Act  of  1917. 


224. 

Railroads  u n 
Federal  Control. 


34 


225. 

Tax  in  no  case  to 
exceed  specified  per- 
centages of  net  in- 
come. 


Sec.  302.  That  the  tax  imposed  by  subdivision  (a)  of 
Section  301  (par.  213-215)  shall  in  no  case  be  more  than 
30  per  centum  of  the  amount  of  the  net  income  in  excess 
of  $3,000  and  not  in  excess  of  $20,000,  plus  80  per  centum 
of  the  amount  of  the  net  income  in  excess  of  $20,000;  the 
tax  imposed  by  subdivision  (b)  of  Section  301  (par.  216- 
218 ) shall  in  no  case  be  more  than  20  per  centum  of  the  amount  of  the  net  income 

in  excess  of  $3,000  and  not  in  excess  of  $20,000,  plus  40  per  centum  of  the  amount 

of  the  net  income  in  excess  of  $20,000;  and  the  above  limitations  shall  apply  to  the 
taxes  computed  under  subdivisions  (a)  and  (b)  of  Section  301  (par.  212-218), 
respectively,  when  used  in  subdivision  (c)  (par.  219-222)  of  that  section.  Nothing 
in  this  section  shall  be  construed  in  such  manner  as  to  increase  the  tax  imposed 
by  Section  301  (par.  212-224). 

Sec.  303.  That  if  part  of  the  net  income  of  a corpora- 
tion is  derived  (1)  from  a trade  or  business  (or  a branch 
of  a trade  or  business)  in  which  the  employment  of  capita! 
is  necessary,  and  (2)  a part  (constituting  not  less  than  30 
per  centum  of  its  total  net  income)  is  derived  from  a sep- 
arate trade  or  business  (or  a distinctly  separate  branch  of 
the  trade  or  business)  which  if  constituting  the  sole  trade 
or  business  would  bring  it  within  the  class  of  “personal 
service  corporations,”  then  (under  regulations  prescribed 
by  the  Commissioner  with  the  approval  of  the  Secretary) 
the  tax  upon  the  first  part  of  such  net  income  shall  be  separately  computed  (allow- 
ing in  such  computation  only  the  same  proportionate  part  of  the  credits  authorized 
in  Sections  311  and  312  (par.  232-244),  and  the  tax  upon  the  second  part  shall  be 
the  same  percentage  thereof  as  the  tax  so  computed  upon  the  first  part  is  of  such 
first  part:  Provided , That  the  tax  upon  such  second  part  shall  in  no  case  be  less 
than  20  per  centum  thereof,  unless  the  tax  upon  the  entire  net  income,  if  com- 
puted without  benefit  of  this  section,  would  constitute  less  than  20  per  centum 
of  such  entire  net  income,  in  which  event  the  tax  shall  be  determined  upon 
the  entire  net  income,  without  reference  to  this  section,  as  other  taxes  are  deter- 
mined under  this  title.  The  total  tax  computed  under  this  section  shall  be  subject 
to  the  limitations  provided  in  Section  302  (par.  225). 

Sec.  304.  (a)  That  the  corporations  enumerated  in 

Section  231  (par.  128-142)  shall,  to  the  extent  that  they  are 
exempt  from  income  tax  under  Title  II,  be  exempt  from 
taxation  under  this  title. 

(b)  Any  corporation  whose  net  income  for  the  taxable 
year  is  less  than  $3,000  shall  be  exempt  from  taxation  under 
this  title. 


226. 

Computation  if  part 
of  net  income  derived 
from  business  where 
capital  is  necessary, 
and  part  from  sep- 
arate business  within 
class  of  “personal 
service  corporation.” 


227. 

Corporations 

empt. 


ex- 


223. 

Net  income  of  less 
than  $3,000. 


cor- 


(d)  In  the  case  of  any  corporation  engaged  in  the 
mining  of  gold,  the  portion  of  the  net  income  derived  from 
the  mining  of  gold  shall  be  exempt  from  the  tax  imposed 
by  this  title,  and  the  tax  on  the  remaining  portion  of  the 
net  income  shall  be  the  proportion  of  a tax  computed  without  the  benefit  of  this 
subdivision  which  such  remaining  portion  of  the  net  income  bears  to  the  entire 
net  income. 


229. 

Gold  mining 
poration. 


230. 

Exemption  propor- 
tioned for  less  than  a 
year. 

months. . 


Sec.  305.  That  if  a tax  is  computed  under  this  title 
for  a period  of  less  than  twelve  months,  the  specific 
exemption  of  $3,000,  wherever  referred  to  in  this  title,  shall 
be  reduced  to  an  amount  which  is  the  same  proportion  of 
$3,000  as  the  number  of  months  in  the  period  is  of  twelve 


PART  III.— CREDITS 

231.  Sec.  310.  That  as  used  in  this  title  the  term  “prewar 
Definition  of  “pre-  period”  means  the  calendar  years  1911,  1912,  and  1913,  or, 

war  period.”  if  a corporation  was  not  in  existence  during  the  whole  of 

such  period,  then  as  many  of  such  years  during  the  whole 
of  which  the  corporation  was  in  existence. 

232.  Sec.  311.  (a)  That  the  war-profits  credit  shall  consist 

War-profits  credit,  of  the  sum  of: 

233.  (1)  A specific  exemption  of  $3,000;  and 

Specific  Exemption. 


35 


234. 

Average  iiet  income 
for  prewar  period, 
plus  or  minus  10%  of 
difference  between  in- 
vested capitals  of  re- 
spective periods. 

235. 

Where  no  net  in- 
c o m e for  prewar 
period,  etc. 


(2)  An  amount  equal  to  the  average  net  income  of  the 
corporation  for  the  prewar  period  plus  or  minus,  as  the 
case  may  be,  10  per  centum  of  the  difference  between  the 
average  invested  capital  for  the  prewar  period  and  the 
invested  capital  for  the  taxable  year.  If  the  tax  is  com- 
puted for  a period  of  less  than  twelve  months  such  amount 
shall  be  reduced  to  the  same  proportion  thereof  as  the 
number  of  months  in  the  period  is  of  twelve  months. 

(b)  If  the  corporation  had  no  net  income  for  the  pre- 
war period,  or  if  the  amount  computed  under  paragraph 
(2)  of  subdivision  (a)  {par.  234)  is  less  than  10  per  centum 
of  its  invested  capital  for  the  taxable  year,  then  the  war- 
profits  credit  shall  be  the  sum  of: 


236. 

Specific  exemption. 

237. 

10%  of  invested 
capital. 

238. 

When  not  in  exist- 
ence in  prewar  period. 


(1)  A specific  exemption  of  $3,000;  and 

(2)  An  amount  equal  to  10  per  centum  of  the  invested 
capital  for  the  taxable  year. 

(c)  If  the  corporation  was  not  in  existence  during  the 
whole  of  at  least  one  calendar  year  during  the  prewar  period, 
then,  except  as  provided  in  subdivision  (d),  {par.  241 ) the 
war-profits  credit  shall  be  the  sum  of ; 


(1)  A specific  exemption  of  $3,000;  and 

(2)  An  amount  equal  to  the  same  percentage  of  the  in- 
vested capital  of  the  taxpayer  for  the  taxable  year  as  the 
average 'percentage  of  net  income  to  invested  capital,  for  the 
prewar  period,  of  corporations  engaged  in  a trade  or  business 
of  the  same  general  class  as  that  conducted  by  the  taxpayer ; 

but  such  amount  shall  in  no  case  be  less  than  10  per  centum  of  the  invested  capital 
of  the  taxpayer  for  the  taxable  year.  Such  average  percentage  shall  be  determined 
by  the  Commissioner  on  the  basis  of  data  contained  in  returns  made  under  Title  II 
of  the  Revenue  Act  of  1917,  and  the  average  known  as  the  median  shall  be  used. 
If  such  average  percentage  has  not  been  determined  and  published  at  least  30  days 
prior  to  the  time  when  the  return  of  the  taxpayer  is  due,  then  for  purposes  of  such 
return  10  per  centum  shall  be  used  in  lieu  thereof ; but  such  average  percentage  when 
determined  shall  be  used  for  the  purposes  of  Section  250  {par.  183-193)  in  determining 
the  correct  amount  of  the  tax. 


239. 

Specific  exemption. 

240. 

Same  percentage  as 
corporations  in  same 
general  class. 


(d)  The  war-profits  credit  shall  be  determined  in  the 
manner  provided  in  subdivision  (b)  {par.  235-237)  instead 
of  in  the  manner  provided  in  subdivision  (c)  {par.  238-240) 
in  the  case  of  any  corporation  which  was  not  in  existence 
during  the  whole  of  at  least  one  calendar  year  during  the 
prewar  period,  if  (1)  a majority  of  its  stock  at  any  time 
during  the  taxable  year  is  owned  or  controlled,  directly  or 
indirectly,  by  a corporation  which  was  in  existence  during 
the  whole  of  at  least  one  calendar  year  during  the  prewar  period,  or  if  (2)  50  per 
centum  or  more  of  its  gross  income  (as  computed  under  Section  233  {par.  144- 147) 
for  income  tax  purposes)  consists  of  gains,  profits,  commissions,  or  other  income, 
derived  from  a government  contract  or  contracts  made  between  April  6,  1917,  and 
November  11,  1918,  both  dates  inclusive. 


241. 

Manner  o f deter- 
mining  war-profits 
credit  of  certain  cor- 
porations not  in  ex- 
istence one  year  dur- 
ing prewar  period. 


242. 

Foreign 

tion. 


corpora- 


(e)  A foreign  corporation  shall  not  be  entitled  to  a 
specific  exemption  of  $3,000. 


243. 

Excess  profits 
credit. 

244. 

Foreign  corpora- 
tion. 


Sec.  312.  That  the  excess-profits  credit  shall  consist  of 
a specific  exemption  of  $3,000  plus  an  amount  equal  to  8 per 
centum  of  the  invested  capital  for  the  taxable  year. 

A foreign  corporation  shall  not  be  entitled  to  the  specific 
exemption  of  $3,000. 


PART  IV.— NET  INCOME 


245. 

Net  income. 


Sec.  320.  (a)  That  for  the  purpose  of  this  title  the  net 

income  of  a corporation  shall  be  ascertained  and  returned— 


36 


246.  (1)  For  the  calendar  shears  1911  and  1912  upon  the  same 

Calendar  years  1911  basis  and  in  the  same  manner  as  provided  in  Section  38  of 
and  1912  as  returned,  the  Act  entitled  “An  Act  to  provide  revenue,  equalize  duties, 
except  taxes  included,  and  encourage  the  industries  of  the  United  States,  and  for 
other  purposes,”  approved  August  5,  1909,  except  that  taxes 
imposed  by  such  section  and  paid  by  the  corporation  within  the  year  shall  be  included ; 

(2)  For  the  calendar  year  1913  upon  the  same  basis  and 
in  the  same  manner  as  provided  in  Section  II  of  the  Act 
entitled  “An  Act  to  reduce  tariff  duties  and  to  provide 
revenue  for  the  Government,  and  for  other  purposes,”  ap- 
proved October  3,  1913,  except  that  taxes  imposed  by  Section 
38  of  such  Act  of  August  5,  1909,  and  paid  by  the  corporation 
within  the  year  shall  be  included,  and  except  that  the  amounts 
received  by  it  as  dividends  upon  the  stock  or  from  the  net 
earnings  of  other  corporations  subject  to  the  tax  imposed  by  Section  II  of  such  Act 
of  October  3,  1913,  shall  be  deducted;  and 

248.  (3)  For  the  taxable  year  upon  the  same  basis  and  in 

Taxable  year.  the  same  manner  as  provided  for  income  tax  purposes  in 

Title  II  of  this  Act. 


247. 

Calendar  year  1913 
as  returned,  except 
taxes  included  and 
dividends  or  earnings 
of  other  corporations 
deducted. 


249.  (b)  The  average  net  income  for  the  prewar  period  shall 

How  average  net  be  determined  by  dividing  the  number  of  years  within  that 
income  for  prewar  period  during  the  whole  of  which  the  corporation  was  in 
period  determined.  existence  into  the  sum  of  the  net  income  for  such  years, 

even  though  there  may  have  been  no  net  income  for  one 

or  more  of  such  years. 


PART  V.— INVESTED  CAPITAL 


Definitions. 

250. 

“Intangible  prop- 
erty.” 

251. 

“Tangible  prop- 
erty.” 

252. 

“Borrowed  capital.” 


Sec.  325.  (a)  That  as  used  in  this  title — 

The  term  “intangible  property”  means  patents,  copyrights, 
secret  processes  and  formulae,  good  will,  trade-marks,  trade- 
brands,  franchises,  and  other  like  property; 

The  term  “tangible  property”  means  stocks,  bonds,  notes, 
and  other  evidences  of  indebtedness,  bills  and  accounts  receiv- 
able, leaseholds,  and  other  property  other  than  intangible 
property ; 

The  term  “borrowed  capital”  means  money  or  other 
property  borrowed,  whether  represented  by  bonds,  notes,  open 
accounts,  or  otherwise; 


253.  The  term  “inadmissible  assets”  means  stocks,  bonds,  and 

“Inadmissible  as-  other  obligations  (other  than  obligations  of  the  United 
sets.”  States),  the  dividends  or  interest  from  which  is  not  included 

in  computing  net  income,  but  where  the  income  derived  from 
such  assets  consists  in  part  of  gain  or  profit  derived  from  the  sale  or  other  disposition 
thereof,  or  where  all  or  part  of  the  interest  derived  from  such  assets  is  in  effect 
included  in  the  net  income  because  of  the  limitation  on  the  deduction  of  interest 
under  paragraph  (2)  of  subdivision  (a)  of  Section  234  (par.  750),  a corresponding 
part  of  the  capital  invested  in  such  assets  shall  not  be  deemed  to  be  inadmissible 
assets ; The  term  “admissible  assets”  means  all  assets  other 
“Admissible  assets.”  than  inadmissible  assets,  valued  in  accordance  with  the  pro- 
visions of  subdivision  (a)  of  Section  326  (par.  255-266), 
Section  330  (par.  275-278),  and  Section  331  (par.  279). 

(b)  For  the  purposes  of  this  title,  the  par  value  of  stock 
or  shares  shall,  in  the  case  of  stock  or  shares  issued  at  a 
nominal  value  or  having  no  par  value,  be  deemed  to  be  the 
fair  market  value  as  of  the  date  or  dates  of  issue  of  such 
stock  or  shares. 


254. 

Constructive  par 
value  of  stock  or 
shares. 


255. 

“Invested  capital.” 

256. 

Cash  paid  in. 

257. 

Cash  value  of 
tangible  property. 


Sec.  326.  (a)  That  as  used  in  this  title  the  term  “invested 
capital”  for  any  year  means  (except  as  provided  in  sub- 
divisions (b)  and  (c)  (par.  261-262 ) of  this  section)  : 

(1)  Actual  cash  bona  fide  paid  in  for  stock  or  shares; 

(2)  Actual  cash  value  of  tangible  property,  other  than 
cash,  bona  fide  paid  in  for  stock  or  shares,  at  the  time  of 
such  payment,  but  in  no  case  to  exceed  the  par  value  of  the 
original  stock  or  shares  specifically  issued  therefor,  unless 


37 


the  actual  cash  value  of  such  tangible  property  at  the  time  paid  in  is  shown  to  the 
satisfaction  of  the  Commissioner  to  have  been  clearly  and  substantially  in  excess 
of  such  par  value,  in  which  case  such  excess  shall  be  treated  as  paid-in  surplus : 
Provided,  That  the  Commissioner  shall  keep  a record  of  all  cases  in  which  tangible 
property  is  included  in  invested  capital  at  a value  in  excess  of  the  stock  or  shares 
issued  therefor,  containing  the  name  and  address  of  each  taxpayer,  the  business  in 
which  engaged,  the  amount  of  invested  capital  and  net  income  shown  by  the  return, 
the  value  of  the  tangible  property  at  the  time  paid  in,  the  par  value  of  the  stock 
or  shares  specifically  issued  therefor,  and  the  amount  included  under  this  paragraph 
as  paid-in  surplus.  The  Commissioner  shall  furnish  a copy  of  such  rgcord  and  other 
detailed  information  with  respect  to  such  cases  when  required  by  resolution  of  either 
house  of  Congress,  without  regard  to  the  restrictions  contained  in  Section  257  (par. 
203-204). 


(3)  Paid-in  or  earned  surplus  and  undivided  profits;  not 
including  surplus  and  undivided  profits  earned  during  the 
year ; 

(4)  Intangible  property  bona  fide  paid  in  for  stock  or 
shares  prior  to  March  3,  1917,  in  an  amount  not  exceeding 

(a)  the  actual  cash  value  of  such  property  at  the  time  paid 
in,  (b)  the  par  value  of  the  stock  or  shares  issued  therefor, 
or  (c)  in  the  aggregate  25  per  centum  of  the  par  value  of  the 
total  stock  or  shares  of  the  corporation  outstanding  on  March 

3,  1917,  whichever  is  lowest; 

(5)  Intangible  property  bona  fide  paid  in  for  stock  or 
shares  on  or  after  March  3,  1917,  in  an  amount  not  exceeding 
(a)  the  actual  cash  value  of  such  property  at  the  time  paid 
in,  (b)  the  par  value  of  the  stock  or  shares  issued  therefor, 
or  (c)  in  the  aggregate  25  per  centum  of  the  par  value  of  the 
total  stock  or  shares  of  the  corporation  outstanding  at  the 

beginning  of  the  taxable  year,  whichever  is  lowest : Provided,  that  in  no  case  shall 
the  total  amount  included  under  paragraphs  (4)  and  (5)  (par.  239-260),  exceed  in 
the  aggregate  25  per  centum  of  the  par  value  of  the  total  stock  or  shares  of  the 
corporation  outstanding  at  the  beginning  of  the  taxable  year ; but 


258. 

Surplus  and  un- 
divided profits. 

259. 

Intangible  proper- 
ty paid  in  for  stock 
or  shares  prior  to 
3-3-17. 


260. 

On  or  after  3-3-17. 
Limitation  on  total 
amount  intangible 
property. 


261. 

Borrowed  capital 
not  included. 


(b)  As  used  in  this  title  the  term  “invested  capital’ 
not  include  borrowed  capital. 


does 


262. 

Deduction  from  in- 
vested capital. 


(c)  There  shall  be  deducted  from  invested  capital  as 
above  defined  a percentage  thereof  equal  to  the  percentage 
which  the  amount  of  inadmissible  assets  is  of  the  amount  of 
admissible  and  inadmissible  assets  held  during  the  taxable 
year. 


(d)  The  invested  capital  for  any  period  shall  be  the 
o f average  invested  capital  for  such  period,  but  in  the  case  of 
a corporation  making  a return  for  a fractional  part  of  a 
year,  it  shall  (except  for  the  purpose  of  paragraph  (2)  of 
subdivision  (a)  of  Section  311)  (par.  234)  be  the  same  fractional  part  of  such  average 
invested  capital. 

. The  average  invested  capital  for  the  prewar  period  shall 

, be  determined  by  dividing  the  number  of  years  within  that 
*or  prewar  perio  . perj0(j  during  the  whole  of  which  the  corporation  was  in 
existence  into  the  sum  of  the  average  invested  capital  for  such  years. 


263. 

Determination 
invested  capital. 


265. 

Cases  where — 

266. 

Invested  capital 
undetermined. 


Sec.  327.  That  in  the  following  cases  the  tax  shall  be 
determined  as  provided  in  Section  328  (par.  270-274)  ; 

(a)  Where  the  Commissioner  is  unable  to  determine  the 
invested  capital  as  provided  in  Section  326  (par.  233-264)  ; 


267. 

Foreign  cor- 
poration. 

268. 

Commissioner  un- 
a b 1 e to  determine 
necessary  informa- 
tion. 


(b)  In  the  case  of  a foreign  corporation; 

(c)  Where  a mixed  aggregate  of  tangible  property  and 
intangible  property  has  been  paid  in  for  stock  or  for  stock 
and  bonds  and  the  Commissioner  is  unable  satisfactorily  to 
determine  the  respective  values  of  the  several  classes  of 
property  at  the  time  of  payment,  or  to  distinguish  the  classes 
of  property  paid  in  for  stock  and  for  bonds,  respectively; 


38 


269. 

Tax  determined 
without  this  section 
would  work  hardship, 
except  where  due  to 
high  rate  of  profits 
or  where  50%  or 
more  of  gross  income 
derived  on  cost-plus 
basis  from  govern- 
ment contracts,  etc. 


(d)  Where  upon  application  by  the  corporation  the  Com- 
missioner finds  and  so  declares  of  record  that  the  tax  if 
determined  without  benefit  of  this  section  would,  owing  to 
abnormal  conditions  affecting  the  capital  or  income  of  the 
corporation,  work  upon  the  corporation  an  exceptional  hard- 
ship evidenced  by  gross  disproportion  between  the  tax  com- 
puted without  benefit  of  this  section  and  the  tax  computed 
by  reference  to  the  representative  corporations  specified  in 
Section  328  {par.  270-272).  This  subdivision  shall  not  apply 
to  any  case  (1)  in  which  the  tax  (computed  without  benefit 
of  this  section)  is  high  merely  because  the  corporation  earned 
within  the  taxable  year  a high  rate  of  profits  upon  a normal 
invested  capital  nor  (2)  in  which  50  per  centum  or  more  of  the  gross  income  of  the 
corporation  for  the  taxable  year  (computed  under  Section  233  of  Title  II)  {par. 
144-147)  consists  of  gains,  profits,  commissions,  or  other  income,  derived  on  a cost- 
plus  basis  from  a Government  contract  or'  contracts  made  between  April  6,  1917, 
and  November  11,  1918,  both  dates  inclusive. 

Sec.  328.  (a)  In  the  cases  specified  in  Section  327  {par. 
266-269)  the  tax  shall  be  the  amount  which  bears  the  same 
ratio  to  the  net  income  of  the  taxpayer  (in  excess  of  the 
specific  exemption  of  $3,000)  for  the  taxable  year,  as  the 
average  tax  of  representative  corporations  engaged  in  a like 
or  similar  trade  or  business,  bears  to  their  average  net  income 
(in  excess  of  the  specific  exemption  of  $3,000)  for  such  year.  In  the  case  of  a 
foreign  corporation  the  tax  shall  be  computed  without  deducting  the  specific  exemption 
of  $3,000  either  for  the  taxpayer  or  the  representative  corporations. 

In  computing  the  tax  under  this  section  the  Commissioner 
shall  compare  the  taxpayer  only  with  representative  cor- 


270. 

Tax  to  bear  same 
ratio  to  net  income  as 
average  tax  of  like 
corporations. 


271. 

Commissioner 


to 


compare  only  with 
representative  cor- 
porations similar- 


porations  whose  invested  capital  can  be  satisfactorily  deter- 
mined under  Section  326  {par.  255-262)  and  which  are,  as 
nearly  as  may  be,  similarly  circumstanced  with  respect  to 
1 r;rrnnict9nr<*H  gross  income,  net  income,  profits  per  unit  of  business  trans- 

y * acted  and  capital  employed,  the  amount  and  rate  of  war- 

profits  or  excess-profits,  and  all  other  relevant  facts  and  circumstances. 

(b)  For  the  purposes  of  subdivision  (a)  the  ratios  be- 

P , • tween  the  average  tax  and  the  average  net  income  of  repre- 

. rnmmiceinnpr  sentative  corporations  shall  be  determined  by  the  Commis- 

y * sioner  in  accordance  with  regulations  prescribed  by  him 

with  the  approval  of  the  Secretary. 

In  cases  in  which  the  tax  is  to  be  computed  under  this 
section,  if  the  tax  as  computed  without  the  benefit  of  this 
section  is  less  than  50  per  centum  of  the  net  income  of  the 
taxpayer,  the  installments  shall  in  the  first  instance  be  com- 
puted upon  the  basis  of  such  tax;  but  if  the  tax  so  computed 
is  50  per  centum  or  more  of  the  net  income,  the  installments 
shall  in  the  first  instance  be  computed  upon  the  basis  of  a 
tax  equal  to  50  per  centum  of  the  net  income.  In  any  case, 
the  actual  ratio  when  ascertained  shall  be  used  in  determining 
the  correct,  amount  of  the  tax.  If  the  correct  amount  of  the 
tax  when  determined  exceeds  50  per  centum  of  the  net 
income,  any  excess  of  the  correct  installments  over  the  amounts  actually  paid  shall 
on  notice  and  demand  be  paid  together  with  interest  at  the  rate  of  54  of  1 per  centum 
per  month  on  such  excess  from  the  time  the  installment  was  due. 

(c)  The  Commissioner  shall  keep  a record  of  all  cases 
in  which  the  tax  is  determined  in  the  manner  prescribed  in 
subdivision  (a)  {par.  270-271),  containing  the  name  and 
address  of  each  taxpayer,  the  business  in  which  engaged,  the 
amount  of  invested  capital  and  net  income  shown  by  the 

return,  and  the  amount  of  invested  capital  as  determined  under  such  subdivision. 
The  Commissioner  shall  furnish  a copy  of  such  record  and  other  detailed  information 
with  respect  to  such  cases  when  required  by  resolution  of  either  House  of  Congress, 
without  regard  to  the  restrictions  contained  in  Section  257  {par.  203). 

39 


273. 

Method  of  deter- 
mining installment  in 
first  instance.  Actual 
ratio  used  t o de- 
t ermine  correct 
amount  of  tax.  In- 
terest o n excess  o f 
correct  installments. 


274. 

Complete  record  to 
be  kept  where  tax  so 
determined. 


275. 

Reorganiza- 
tion, consolidation  or 
change  of  ownership 
after  1-1-11. 


PART  VI.— REORGANIZATIONS 

Sec.  330.  That  in  the  case  of  the  reorganization,  con- 
solidation, or  change  of  ownership  after  January  1,  1911,  of 
a trade  or  business  now  carried  on  by  a corporation,  the 
corporation  shall  for  the  purposes  of  this  title  be  deemed  to 
have  been  in  existence  prior  to  that  date,  and  the  net  income 
and  invested  capital  of  such  predecessor  trade  or  business 
for  all  or  any  part  of  the  prewar  period  prior  to  the  organization  of  the  corporation 
now  carrying  on  such  trade  or  business  shall  be  deemed  to  have  been  the  net  income 
and  invested  capital  of  such  corporation. 

270  If  such  predecessor  trade  or  business  was  carried  on  by  a 

Tf  ullci  partnership  or  individual  the  net  income  for  the  prewar 

_ ^ • j v • period  shall,  under  regulations  prescribed  by  the  Commissioner 

dividual  or  partner-  t^ie  aPProva^  °f  the  Secretary,  be  ascertained  and  returned 


ship. 


277. 

Where  organized 
before  7-1-19  in  which 
capital  is  material  in- 
come producing  fac- 
tor. Net  income  of 
individual  or  partner- 
ship may  be  taxed  as 
corp.  from  1-1-18  to 
such  date. 


as  nearly  as  may  be  upon  the  same  basis  and  in  the  same 
manner  as  provided  for  corporations  in  Title  II,  including 
a reasonable  deduction  for  salary  or  compensation  to  each  partner  or  the  individual 
for  personal  services  actually  rendered. 

In  the  case  of  the  organization  as  a corporation  before 
July  1,  1919,  of  any  trade  or  business  in  which  capital  is  a 
material  income-producing  factor  and  which  was  previously 
owned  by  a partnership  or  individual,  the  net  income  of  such 
trade  or  business  from  January  1,  1918,  to  the  date  of  such 
reorganization  may  at  the  option  of  the  individual  or  partner- 
ship be  taxed  as  the  net  income  of  a corporation  is  taxed 
under  Titles  II  and  III ; in  which  event  the  net  income  and 
invested  capital  of  such  trade  or  business  shall  be  computed 
as  if  such  corporation  had  been  in  existence  on  and  after 
January  1,  1918,  and  the  undistributed  profits  or  earnings  of 
such  trade  or  business  shall  not  be  subject  to  the  surtax  imposed  in  Section  211 
(par.  43-44 ) but  amounts  distributed  on  or  after  January  1,  1918,  from  the  earnings 
of  such  trade  or  business  shall  be  taxed  to  the  recipients  as  dividends,  and  all  the 
provisions  of  Titles  II  and  III  relating  to  corporations  shall,  so  far  as  practicable, 
apply  to  such  trade  or  business : Provided,  That  this  paragraph  shall  not  apply  to 
any  trade  or  business  the  net  income  of  which  for  the  taxable  year  1918  was  less  than 
20  per  centum  of  its  invested  capital  for  such  year : Provided  further,  That  any  tax- 
payer who  takes  advantage  of  this  paragraph  shall  pay  the  tax  imposed  by  Section 
1000  (par.  51 5- 521)  of  this  Act  and  by  the  first  subdivision  of  Section  407  of  the 
Revenue  Act  of  1916,  as  if  such  taxpayer  had  been  a corporation  on  and  after  January 
1,  1918,  with  a capital  stock  having  no  par  value. 

If  any  asset  of  the  trade  or  business  in  existence  both 
during  the  taxable  year  and  any  prewar  year  is  included  in 
the  invested  capital  for  the  taxable  year  but  is  not  included 
in  the  invested  capital  for  such  prewar  year,  or  is  valued 
on  a different  basis  in  computing  the  invested  capital  for  the 
taxable  year  and  such  prewar  year,  respectively,  then  under  rules  and  regulations  to 
be  prescribed  by  the  Commissioner  with  the  approval  of  the  Secretary  such  readjust- 
ments shall  be  made  as  are  necessary  to  place  the  computation  of  the  invested  capital 
for  such  prewar  year  on  the  basis  employed  in  detesmining  the  invested  capital  for 
the  taxable  year. 

Sec.  331.  In  the  case  of  the  reorganization,  consolidation, 
or  change  of  ownership  of  a trade  or  business,  or  change  of 
ownership  of  property,  after  March  3,  1917,  if  an  interest  or 
control  in  such  trade  or  business  or  property  of  50  per  centum 
or  more  remains  in  the  same  persons,  or  any  of  them,  then 
no  asset  transferred  or  received  from  the  previous  owner 
shall,  for  the  purpose  of  determining  invested  capital,  be 
allowed  a greater  value  than  would  have  been  allowed  under 
this  title  in  computing  the  invested  capital  of  such  previous  owner  if  such  asset  had 
not  been  so  transferred  or  received : Provided,  That  if  such  previous  owner  was  not 
a corporation,  then  the  value  of  any  asset  so  transferred  or  received  shall  be  taken 
at  its  cost  of  acquisition  (at  the  date  when  acquired  by  such  previous  owner)  with 
proper  allowance  for  depreciation,  impairment,  betterment  or  development,  but  no 
addition  to  the  original  cost  shall  be  made  for  any  charge  or  expenditure  deducted  as 
expense  or  otherwise  on  or  after  March  1,  1913,  in  computing  the  net  income  of 
such  previous  owner  for  purposes  of  taxation. 

40 


278. 

Assets  in  existence 
during  taxable  and 
prewar  years. 


279. 

Value  of  assets 
when  interest  or  con- 
trol of  50%  remains 
in  same  persons, 
where  change  occurs 
after  3-3-17. 


280. 

Computation  of  tax 
when  return  is  for 
fiscal  year  1917-18. 


281. 

Amounts  paid  un- 
der Act  of  1917 
credited  against  tax, 
and  excess  refunded. 


PART  VII.— MISCELLANEOUS 

Sec.  335.  (a)  That  if  a corporation  (other  than  a per- 

sonal service  corporation)  makes  return  for  a fiscal  year 
beginning  in  1917  and  ending  in  1918,  the  tax  for  the  first 
taxable  year  under  this  title  shall  be  the  sum  of:  (1)  the 
same  proportion  of  a tax  for  the  entire  period  computed 
under  Title  II  of  the  Revenue  Act  of  1917  which  the  portion  of  such  period  falling 
within  the  calendar  year  1917  is  of  the  entire  period,  and  (2)  the  same  proportion 

of  a tax  for  the  entire  period  computed  under  this  title  at  the  rates  specified  in  sub- 

division (a)  of  Section  301  (par.  212-215 ) which  the  portion  of  such  period  falling 
within  the  calendar  year  1918  is  of  the  entire  period. 

Any  amount  heretofore  or  hereafter  paid  on  account  of 
the  tax  imposed  for  such  fiscal  year  by  Title  II  of  the 
Revenue  Act  of  1917  shall  be  credited  toward  the  payment  of 
the  tax  imposed  for  such  fiscal  year  by  this  title,  and  if  the 

amount  so  paid  exceeds  the  amount  of  the  tax  imposed  by 

this  title,  the  excess  shall  be  credited  or  refunded  to  the 
corporation  in  accordance  with  the  provisions  of  Section  252  (par.  195). 

2g2  (b)  If  a corporation  makes  return  for  a fiscal  year 

f n . beginning  in  1918  and  ending  in  1919,  the  tax  for  such  fiscal 

1918ai919r  *1SCa  ^ear  year  under  this  title  shall  be  the  sum  of:  (1)  the  same 
y y y#  proportion  of  a tax  for  the  entire  period  computed  under 

subdivision  (a)  of  Section  301  (par.  212-215),  which  the  portion  of  such  period  falling 
within  the  calendar  year  1918  is  of  the  entire  period,  and  (2)  the  same  proportion  of 
a tax  for  the  entire  period  computed  under  subdivision  (b)  (par.  216-218 ) or  (c)  of 
Section  301  (par.  219-222 ) which  the  portion  of  such  period  falling  within  the  calendar 
year  1919  is  of  the  entire  period. 

(c)  If  a partnership  or  a personal  service  corporation 
makes  return  for  a fiscal  year  beginning  in  1917  and  ending 
in  1918,  it  shall  pay  the  same  proportion  of  a tax  for  the 
entire  period  computed  under  Title  II  of  the  Revenue  Act 
of  1917  which  the  portion  of  such  period  falling  within  the 
calendar  year  1917  is  of  the  entire  period. 

Any  tax  paid  by  a partnership  or  personal  service  cor- 
poration for  any  period  beginning  on  or  after  January  1,  1918, 
shall  be  immediately  refunded  to  the  partnership  or  corpora- 
tion as  a tax  erroneously  or  illegally  collected. 

Sec.  336.  That  every  corporation,  not  exempt  under  Sec- 
tion 304  (par.  227-229)  shall  make  a return  for  the  purposes 
of  this  title.  Such  returns  shall  be  made,  and  the  taxes 
imposed  by  this  title  shall  be  paid,  at  the  same  times  and 
places,  in  the  same  manner,  and  subject  to  the  same  conditions,  as  is  provided  in  the 
case  of  returns  and  payment  of  income  tax  by  corporations  for  the  purposes  of  Title  II, 
and  all  the  provisions  of  that  title  not  inapplicable,  including  penalties,  are  hereby  made 
applicable  to  the  taxes  imposed  by  this  title. 

Sec.  337.  That  in  the  case  of  a bona  fide  sale  of  mines, 
oil  or  gas  wells,  or  any  interest  therein,  where  the  principal 
value  of  the  property  has  been  demonstrated  by  prospecting 
or  exploration  and  discovery  work  done  by  the  taxpayer,  the 
portion  of  the  tax  imposed  by  this  title  attributable  to  such 
sale  shall  not  exceed  20  per  centum  of  the  selling  price  of  such  property  or  interest. 


283. 

Partnership  or  per- 
sonal service  cor- 
poration return  for 
fiscal  year  1917-1918. 

284. 

Refunds  of  tax  paid 
for  1918. 

285. 

Returns  required 
of  corporations. 


286. 

Tax  limit  on  bona 
fide  sales  of  mines,  oil 
or  gas  wells. 


Definitions. 


TITLE  IV— ESTATE  TAX 

Sec.  400.  That  when  used  in  this  title- 


287. 

“Executor.’ 

288. 

“Collector.5 


The  term  “executor”  means  the  executor  or  administrator 
of  the  decedent,  or,  if  there  is  no  executor  or  administrator, 
any  person  who  takes  possession  of  any  property  of  the 
decedent;  and 

The  term  “collector”  means  the  collector  of  internal 
revenue  of  the  district  in  which  was  the  domicile  of  the  dece- 
dent at  the  time  of  his  death,  or,  if  there  was  no  such  domicile 
in  the  United  States,  then  the  collector  of  the  district  in  which  is  situated  the  part 
of  the  gross  estate  of  the  decedent  in  the  United  States,  or,  if  such  part  of  the 
gross  estate  is  situated  in  more  than  one  district,  then  the  collector  of  internal  revenue 
of  such  district  as  may  be  designated  by  the  Commissioner. 

289.  Sec.  401.  That  (in  lieu  of  the  tax  imposed  by  Title  II 

Tax  on  transfer  of  of  the  Revenue  Act  of  1916,  as  amended,  and  in  lieu  of  the 

41 


net  estate  of  decedents  tax  imposed  by  Title  IX  of  the  Revenue  Act  of  1917)*  a 
dying  after  passage  of  tax  equal  to  the  sum  of  the  following  percentages  of  the 
Act.  value  of  the  net  estate  (determined  as  provided  in  Section 

403  (par.  298-310),  is  hereby  imposed  upon  the  transfer  of 
the  net  estate  of  every  decedent  dying  after  the  passage  of  this  Act,  whether  a resident 
or  non-resident  of  the  United  .States : 


1 per  centum  of  the  amount  of  the  net  estate  not  in  excess  of  $50,000; 

2 per  centum  of  the  amount  by  which  the  net  estate  exceeds  $50,000  and  does  not 
exceed  $150,000 ; 

3 per  centum  of  the  amount  by  which  the  net  estate  exceeds  $150,000  and  does  not 
exceed  $250,000; 

4 per  centum  of  the  amount  by  which  the  net  estate  exceeds  $250,000  and  does  not 
exceed  $450,000; 

6 per  centum  of  the  amount  by  which  the  net  estate  exceeds  $450,000  and  does  not 
exceed  $750,000; 

8 per  centum  of  the  amount  by  which  the  net  estate  exceeds  $750,000  and  does  not 
exceed  $1,000,000; 

10  per  centum  of  the  amount  by  which  the  net  estate  exceeds  $1,000,000  and  does 
not  exceed  $1,500,000; 

12  per  centum  of  the  amount  by  which  the  net  estate  exceeds  $1,500,000  and  does 
not  exceed  $2,000,000; 

14  per  centum  of  the  amount  by  which  the  net  estate  exceeds  $2,000,000  and  does 
not  exceed  $3,000,000  ; 

16  per  centum  of  the  amount  by  which  the  net  estate  exceeds  $3,000,000  and  does 
not  exceed  $4,000,000; 

18  per  centum  of  the  amount  by  which  the  net  estate  exceeds  $4,000,000  and  does 
not  exceed  $5,000,000; 

20  per  centum  of  the  amount  by  which  the  net  estate  exceeds  $5,000,000  and  does 
not  exceed  $8,000,000; 

22  per  centum  of  the  amount  by  which  the  net  estate  exceeds  $8,000,000  and  does 
not  exceed  $10,000,000;  and 

25  per  centum  of  the  amount  by  which  the  net  estate  exceeds  $10,000,000. 

The  taxes  imposed  by  this  title  or  by  Title  II  of  the 
Revenue  Act  of  1916  (as  amended  by  the  Act  entitled  “An 
Act  to  provide  increased  revenue  to  defray  the  expenses  of 
the  increased  appropriations  for  the  Army  and  Navy  and  the 
extensions  of  fortifications,  and  for  other  purposes,”  approved 
March  3,  1917)  or  by  Title  IX  of  the  Revenue  Act  of  1917, 
shall  not  apply  to  the  transfer  of  the  net  estate  of  any  decedent  who  has  died  or  may 
die  while  serving  in  the  military  or  naval  forces  of  the  United  States  in  the  present 
war  or  from  injuries  received  or  disease  contracted  while  in  such  service,  and  any 
such  tax  collected  upon  such  transfer  shall  be  refunded  to  the  executor. 


290. 

Not  applicable  to 
estates  of  those  dying 
while  in  military  or 
naval  service. 


291. 

Gross  estate  in- 
cludes value  of  all 
property 

292. 

Subject  to  charges 
of  expenses  and  dis- 
tribution. 


Sec.  402.  That  the  value  of  the  gross  estate  of  the 
decedent  shall  be  determined  by  including  the  value  at  the 
time  of  his  death  of  all  property,  real  or  personal,  tangible  or 
intangible,  wherever  situated — 

(a)  To  the  extent  of  the  interest  therein  of  the  decedent 
at  the  time  of  his  death  which  after  his  death  is  subject  to 
the  payment  of  the  charges  against  his  estate  and  the  expenses 
of  its  administration  and  is  subject  to  distribution  as  part 
of  his  estate; 


*The  following  arc  the  rates  on  the  transfer  of  net  estates  under  the  acts  specified. 

An  exemption  of  $50,000  is  allowed  estates  of  residents  of  U.  S.  in  computing  value  of  net 
estate. 


On  amount  of  net  estate 


Not  exceeding  $50,000 

Between  50,000  and  $150,000 

“ 150,000  “ 250,000 

“ 250,000  “ 450,000 

“ 450,000  “ 1,000,000 

“ 1,000,000  “ 2,000,000 

“ 2,000,000  “ 3,000,000 

“ 3,000,000  “ 4,000,000 

“ 4,000,000  “ 5,000,000 

“ 5,000,000  “ 8,000,000 

“ 8,000,000  “ 10,000,000 

Exceeding  $10,000,000 


Rate  at  date  of  death 


9-9-16 

3-3-17 

on  and 

to 

to 

after 

3-2-17 

10-3-17 

10-4-17 

1% 

154% 

2% 

2% 

3% 

4% 

3% 

454% 

6% 

4% 

6% 

8% 

5% 

754% 

10% 

6% 

9% 

12% 

7% 

1054% 

14% 

8% 

12% 

16% 

9% 

1354% 

18% 

10% 

15% 

20% 

10% 

15% 

22% 

10% 

15% 

25% 

42 


293. 

Dower  or  courtesy. 

of  dower  or  courtesy; 


(b)  To  the  extent  of  any  interest  therein  of  the  surviving 
spouse,  existing  at  the  time  of  the  decedent’s  death  as  dower, 
courtesy,  or  by  virtue  of  a statute  creating  an  estate  in  lieu 


294. 

Transferred  or  trust 
created  in  contempla- 
tion of  or  to  take 
effect  after  death. 


(c)  To  the  extent  of  any  interest  therein  of  which  the 
decedent  has  at  any  time  made  a transfer,  or  with  respect  to 
which  he  has  at  any  time  created  a trust,  in  contemplation  of 
or  intended  to  take  effect  in  possession  or  enjoyment  at  or 
after  his  death  (whether  such  transfer  or  trust  is  made  or 
created  before  or  after  the  passage  of  this  Act),  except  in 

case  of  a bona  fide  sale  for  a fair  consideration  in  money  or  money’s  worth.  Any 
transfer  of  a material  part  of  his  property  in  the  nature  of  a final  disposition  or 
distribution  thereof,  mde  by  the  decedent  within  two  years  prior  to  his  death  without 
such  a consideration,  shall,  unless  shown  to  the  contrary,  be  deemed  to  have  been 
made  in  contemplation  of  death  within  the  meaning  of  this  title; 

(d)  To  the  extent  of  the  interest  therein  held  jointly  or 
as  tenants  in  the  entirety  by  the  decedent  and  any  other  person, 
or  deposited  in  banks  or  other  institutions  in  their  joint  names 
and  payable  to  either  or  the  survivor,  except  such  part  thereof 
as  may  be  shown  to  have  originally  belonged  to  such  other 

person  and  never  to  have  belonged  to  the  decedent ; 

(e)  To  the  extent  of  any  property  passing  under  a general 
power  of  appointment  exercised  by  the  decedent  (1)  by  will, 
or  (2)  by  deed  executed  in  contemplation  of,  or  intended  to 
take  effect  in  possession  or  enjoyment  at  or  after,  his  death, 
except  in  case  of  a bona  fide  sale  for  a fair  consideration  in 
money  or  money’s  worth ; and 

(f)  To  the  extent  of  the  amount  receivable  by  the 
executor  as  insurance  under  policies  taken  out  by  the  decedent 
upon  his  own  life;  and  to  the  extent  of  the  excess  over 
$40,000  of  the  amount  receivable  by  all  other  beneficiaries 
as  insurance  under  policies  taken  out  by  the  decedent  upon 
his  own  life. 

Sec.  403.  That  for  the  purpose  of  the  tax  the  value  of 
the  net  estate  shall  be  determined — 

(a)  In  the  case  of  a resident,  by  deducting  from  the  value 
of  the  gross  estate — 

(1)  Such  amounts  for  funeral  expenses,  administration 
expenses,  claims  against  the  estate,  unpaid  mortgages,  losses 
incurred  during  the  settlement  of  the  estate  arising  from 
fires,  storms,  shipwreck,  or  other  casualty,  or  from  theft, 
when  such  losses  are  not  compensated  for  by  insurance  or 
otherwise,  and  such  amounts  reasonably  required  and  actually 
expended  for  the  support  during  the  settlement  of  the  estate 
of  those  dependent  upon  the  decedent,  as  are  allowed  by  the 
laws  of  the  jurisdiction,  whether  within  or  without  the  United 

States,  under  which  the  estate  is  being  administered,  but  not  including  any  income 
taxes  upon  income  received  after  the  death  of  the  decedent,  or  any  estate,  succession, 
legacy,  or  inheritance  taxes ; 

(2)  An  amount  equal  to  the  value  at  the  time  of  the 
decedent’s  death  of  any  property,  real,  personal,  or  mixed, 
which  can  be  identified  as  having  been  received  by  the 
decedent  as  a share  in  the  estate  of  any  person  who  died 
within  five  years  prior  to  the  death  of  the  decedent,  or  which 
can  be  identified  as  having  been  acquired  by  the  decedent  in 
exchange  for  property  so  received,  if  an  estate  tax  under  the 

Revenue  Act  of  1917  or  under  this  Act  was  collected  from  such  estate,  and  if  such 
property  is  included  in  the  decedent’s  gross  estate ; 


295. 

Held  jointly  as  ten- 
ants, or  deposited  in 
banking  institutions. 


296 

Passing  under  gen- 
eral power  of  ap- 
pointment exercised 
by  decedent. 

297. 

Life  insurance  re- 
ceivable by  executor 
and  beneficiaries. 


298. 

Value  of  net  estate. 

299. 

Residents. 

300. 

Deductions  allowed. 
Funeral  and  adminis- 
tration expenses, 
claims,  losses,  sup- 
port of  dependents, 
but  not  designated 
taxes. 


301. 

Value  of  share  of 
estate  of  persons  who 
died  within  5 years 
upon  which  Estate 
tax  was  paid. 


302. 

Bequests,  legacies, 
devises  or  gifts  to  U. 
S.,  state,  etc.,  or  ex- 
clusively for  religious, 
charitable,  scientific, 


(3)  The  amount  of  all  bequests,  legacies,  devises,  or 
gifts,  to  or  for  the  use  of  the  United  States,  any  state, 
territory,  any  political  subdivision  thereof,  or  the  District  of 
Columbia,  for  exclusively  public  purposes,  or  to  or  for  the 
use  of  any  corporation  organized  and  operated  exclusively 
for  religious,  charitable,  scientific,  literary,  or  educational 

43 


literary  or  educa-  purposes,  including  the  encouragement  of  art  and  the  pre- 
tional  purposes.  vention  of  cruelty  to  children  or  animals,  no  part  of  the  net 

earnings  of  which  inures  to  the  benefit  of  any  private  stocks 
holder  or  individual,  or  to  a trustee  or  trustees  exclusively  for  such  religious,  charitable, 
scientific,  literary,  or  educational  purposes.  This  deduction  shall  be  made  in  case 
of  the  estates  of  all  decedents  who  have  died  since  December  31,  1917 ; and 

303.  Exemption.  (4)  An  exemption  of  $50,000; 

304.  (b)  In  the  case  of  a non-resident,  by  deducting  from 
Non-residents  d e - the  value  of  that  part  of  his  gross  estate  which  at  the  time 

ductions.  of  his  death  is  situated  in  the  United  States — 


(1)  That  proportion  of  the  deductions  specified  in  para- 
graph (1)  of  subdivision  (a)  {par.  300 ) of  this  section  which 
the  value  of  such  part  bears  to  the  value  of  his  entire  gross 
estate,  wherever  situated,  but  in  no  case  shall  the  amount  so 
deducted  exceed  10  per  centum  of  the  value  of  that  part 

of  his  gross  estate  which  at  the  time  of  his  death  is  situated  in  the  United  States; 

(2)  An  amount  equal  to  the  value  at  the  time  of  the 
decedent’s  death  of  any  property,  real,  personal,  or  mixed, 
which  can  be  identified  as  having  been  received  by  the  decedent 
as  a share  in  the  estate  of  any  person  who  died  within  five 
years  prior  to  the  death  of  the  decedent,  or  which  can  be 
identified  as  having  been  acquired  by  the  decedent  in  exchange 
for  property  so  received,  if  an  estate  tax  under  the  Revenue 
Act  of  1917  or  under  this  Act  was  collected  from  such  estate, 

and  if  such  property  is  included  in  that  part  of  the  decedent’s  gross  estate  which  at 
the  time  of  his  death  is  situated  in  the  United  States;  and 


305. 

Proportioned,  but 
not  over  10%  of  gross 
estate  in  U.  S. 


306. 

Share  in  estate  of 
person  who  died 
within  5 years  upon 
which  tax  paid  and 
property  included  in 
gross  estate. 


(3)  The  amount  of  all  bequests,  legacies,  devises,  or  gifts, 
to  or  for  the  use  of  the  United  States,  any  state,  territory, 
any  political  subdivision  thereof,  or  the  District  of  Columbia, 
for  exclusively  public  purposes,  or  to  or  for  the  use  of  any 
domestic  corporation  organized  and  operated  exclusively  for 
religious,  charitable,  scientific,  literary,  or  educational  pur- 
poses, including  the  encouragement  of  art  and  the  prevention 
of  cruelty  to  children  or  animals,  no  part  of  the  net  earnings 
of  which  inures  to  the  benefit  of  any  private  stockholder  or 
individual,  or  to  a trustee  or  trustees  exclusively  for  such  religious,  charitable,  scientific, 
literary,  or  educational  purposes  within  the  United  States.  This  deduction  shall  be 
made  in  case  of  the  estates  of  all  decedents  who  have  died  since  December  31,  1917 ; and 


307. 

Bequests,  legacies, 
devises  or  gifts  to  U. 
3.,  state,  etc.,  or  ex- 
clusively for  religious, 
charitable,  scientific, 
literary  or  educa- 
tional purposes. 


No  deductions  shall  be  allowed  in  the  case  of  a non- 
oi  resident  unless  the  executor  includes  in  the  return  required 
lowed  unless  com-  to  be  under  Section  404  {par.  311-312 ) the  value  at  the 
nlefp  return  filed  time  of  h ls  death  of  that  part  of  the  gross  estate  of  the 

p ‘ non-resident  not  situated  in  the  United  States. 

For  the  purpose  of  this  title  stock  in  a domestic  corpora- 
tion owned  and  held  by  a nonresident  decedent,  and  the 
amount  receivable  as  insurance  upon  the  life  of  a nonresident 
decedent  where  the  insurer  is  a domestic  corporation,  shall  be 
deemed  property  within  the  United  States,  and  any  property 
of  which  the  decedent  has  made  a transfer  or  with  respect  to  which  he  has  created 
a trust,  within  the  meaning  of  subdivision  (c)  of  Section  402  {par.  294)  shall  be 
deemed  to  be  situated  in  the  United  States,  if  so  situated  either  at  the  time  of  the 
transfer  or  the  creation  of  the  trust,  or  at  the  time  of  the  decedent’s  death, 
oi q In  the  case  of  any  estate  in  respect  to  which  the  tax  under 

wViAti  tav  existing  law  has  been  paid,  if  necessary  to  allow  the  benefit 

• j ’ of  the  deduction  under  paragraph  (3)  of  subdivision  (a) 

{par.  302),  or  (b)  {par.  307),  the  tax  shall  be  redetermined 
and  any  excess  of  tax  paid  shall  be  refunded  to  the  executor. 


308. 


309. 

Stock,  life  insurance 
and  property  deemed 
within  the  U.  S. 


311. 

Executor  to  give 
written  notice  to  col- 
lector. File  complete 
return. 


Sec.  404.  That  the  executor,  within  sixty  days  after 
qualifying  as  such,  or  after  coming  into  possession  of  any 
property  of  the  decedent,  whichever  event  first  occurs,  shall 
give  written  notice  thereof  to  the  collector.  The  executor 
shall  also,  at  such  times  and  in  such  manner  as  may  be 
required  by  regulations  made  pursuant  to  law,  file  with  the 

44 


collector  a return  under  oath  in  duplicate,  setting  forth  (a)  the  value  of  the  gross 
estate  of  the  decedent  at  the  time  of  his  death,  or,  in  case  of  a nonresident,  of  that 
part  of  his  gross  estate  situated  in  the  United  States ; (b)  the  deductions  allowed 
under  Section  403  (par.  298-310)  ; (c)  the  value  of  the  net  estate  of  the  decedent 
as  defined  in  Section  403  (par.  298-310)',  and  (d)  the  tax  paid  or  payable  thereon; 
or  such  part  of  such  information  as  may  at  the  time  be  ascertainable  and  such  supple- 
mental data  as  may  be  necessary  to  establish  the  correct  tax. 

Return  shall  be  made  in  all  cases  where  the  gross  estate 
at  the  death  of  the  decedent  exceeds  $50,000,  and  in  the  case 
of  the  estate  of  every  nonresident  any  part  of  whose  gross 
estate  is  situated  in  the  United  States.  If  the  executor  is 
unable  to  make  a complete  return  as  to  any  part  of  the  gross 
estate  of  the  decedent,  he  shall  include  in  his  return  a descrip- 
tion of  such  part  and  the  name  of  every  person  holding  a 
legal  or  beneficial  interest  therein,  and  upon  notice  from  the  collector  such  person 
shall  in  like  manner  make  a return  as  to  such  part  of  the  gross  estate.  The  Com- 
missioner shall  make  all  assessments  of  the  tax  under  the  authority  of  existing 
administrative  special  and  general  provisions  of  law  relating  to  the  assessment  and 
collection  of  taxes. 

Sec.  405.  That  if  no  administration  is  granted  upon  the 
estate  of  a decedent,  or  if  no  return  is  filed  as  provided  in 
Section  404  (par.  311-312),  or  if  a return  contains  a false  or 
incorrect  statement  of  a material  fact,  the  collector  or  deputy 
collector  shall  make  a return  and  the  Commissioner  shall 


312. 

Returns  required 
where  gross  estate 
exceeds  $50,000  and 
all  non-resident  es- 
tates. 


313. 

When  collector  or 
deputy  collector 
makes  returns. 


assess  the  tax  thereon. 


Sec.  406.  That  the  tax  shall  be  due  one  year  after  the 
decedent’s  death ; but  in  any  case  where  the  Commissioner 
finds  that  payment  of  the  tax  within  one  year  after  the 
decedent’s  death  would  impose  undue  hardship  upon  the 
estate,  he  may  grant  an  extension  of  time  for  the  payment 
of  the  tax  for  a period  not  to  exceed  three  years  from  the 
due  date.  If  the  tax  is  not  paid  within  one  year  and  180 
days  after  the  decedent's  death,  interest  at  the  rate  of  6 per  centum  per  annum  from 
the  expiration  of  one  year  after  the  decedent’s  death  shall  be  added  as  part  of  the  tax. 

Sec.  407.  That  the  executor  shall  pay  the  tax  to  the 
collector  or  deputy  collector.  If  the  amount  of  the  tax  can 
not  be  determined,  the  payment  of  a sum  of  money  sufficient, 
in  the  opinion  of  the  collector,  to  discharge  the  tax  shall  be 
deemed  payment  in  full  of  the  tax,  except  as  in  this  section 
otherwise  provided.  If  the  amount  so  paid  exceeds  the  amount 
of  the  tax  as  finally  determined,  the  Commissioner  shall 
refund  such  excess  to  the  executor.  If  the  amount  of  the 
tax  as  finally  determined  exceeds  the  amount  so  paid,  the 
collector  shall  notify  the  executor  of  the  amount  of  such 
excess  and  demand  payment  thereof.  If  such  excess  part  of  the  tax  is  not  paid  within 
thirty  days  after  such  notification,  interest  shall  be  added  thereto  at  the  rate  of 
10  per  centum  per  annum  from  the  expiration  of  such  thirty  days’  period  until  paid, 
and  the  amount  of  such  excess  shall  be  a lien  upon  the  entire  gross  estate,  except 
such  part  thereof  as  may  have  been  sold  to  a bona  fide  purchaser  for  a fair  considera- 
tion in  money  or  money’s  worth. 

The  collector  shall  grant  to  the  person  paying  the  tax 


314. 

Tax  due  one  year 
after  death,  but  time 
may  be  extended 
three  years.  Interest 
added  if  unpaid. 


315. 

Tax  paid  to  col- 
lector. If  unable  to 
determine,  collector 
to  fix  amount  and  ad- 
just later.  Interest 
added  to  excess  tax 
not  paid  30  days  after 
notification. 


Duplicate  tax  re- 
ceipts given. 


duplicate  receipts,  either  of  which  shall  be  sufficient  evidence 
of  such  payment,  and  shall  entitle  the  executor  to  be  credited 
and  allowed  the  amount  thereof  by  any  court  having  juris- 


diction to  audit  or  settle  his  accounts. 

Sec.  408.  That  if  the  tax  herein  imposed  is  not  paid 
with  180  days  after  it  is  due,  the  collector  shall,  unless  there 
is  reasonable  cause  for  further  delay,  proceed  to  collect  the 
tax  under  the  provisions  of  general  law,  or  commence  appro- 
priate proceedings  in  any  court  of  the  United  States,  in  the 
name  of  the  United  States,  to  subject  the  property  of  the 
decedent  to  be  sold  under  the  judgment  or  decree  of  the 
court.  From  the  proceeds  of  such  sale  the  amount  of  the 
tax,  together  with  the  costs  and  expenses  of  every  description  to  be  allowed  by  the 
court,  shall  be  first  paid,  and  the  balance  shall  be  deposited  according  to  the  order 
of  the  court,  to  be  paid  under  its  direction  to  the  person  entitled  thereto. 

45 


317. 

Collector  to  pro- 
ceed to  collect  tax 
180  days  after  it  is 
due.  Tax  and  ex- 
penses first  paid  from 
proceeds  of  sale. 


318. 

Tax  to  be  paid  out 
of  estate  before  dis- 
t r i b u t i o n unless 
otherwise  directed  by 
will.  Executor  t o 
collect  tax  on  pro- 
ceeds of  life  insur- 
ance  from  bene- 
ficiaries. 


If  the  tax  or  any  part  thereof  is  paid  by,  or  collected  out 
of  that  part  of  the  estate  passing  to  or  in  the  possession  of, 
any  person  other  than  the  executor  in  his  capacity  as  such, 
such  person  shall  be  entitled  to  reimbursement  out  of  any 
part  of  the  estate  still  undistributed  or  by  a just  and  equitable 
contribution  by  the  persons  whose  interest  in  the  estate  of 
the  decedent  would  have  been  reduced  if  the  tax  had  been 
paid  before  the  distribution  of  the  estate  or  whose  interest 
is  subject  to  equal  or  prior  liability  for  the  payment  of  taxes, 
debts,  or  other  charges  against  the  estate,  it  being  the  pur- 
pose and  intent  of  this  title  that  so  far  as  is  practicable  and 
unless  otherwise  directed  by  the  will  of  the  decedent  the  tax  shall  be  paid  out  of 
the  estate  before  its  distribution.  If  any  part  of  the  gross  estate  consists  of  proceeds 
of  policies  of  insurance  upon  the  life  of  the  decedent  receivable  by  a beneficiary  other 
than  the  executor,  the  executor  shall  be  entitled  to  recover  from  such  beneficiary 
such  portion  of  the  total  tax  paid  as  the  proceeds,  in  excess  of  $40,000,  of  such 
policies  bear  to  the  net  estate.  If  there  is  more  than  one  such  beneficiary  the  executor 
shall  be  entitled  to  recover  from  such  beneficiaries  in  the  same  ratio. 

Sec.  409.  That  unless  the  tax  is  sooner  paid  in  full,  it 
shall  be  a lien  for  ten  years  upon  the  gross  estate  of  the 
decedent,  except  that  such  part  of  the  gross  estate  as  is 
used  for  the  payment  of  charges  against  the  estate  and 
expenses  of  its  administration,  allowed  by  any  court  having 
jurisdiction  thereof,  shall  be  divested  of  such  lien.  If  the  Commissioner  is  satisfied 
that  the  tax  liability  of  an  estate  has  been  fully  discharged  or  provided  for,  he  may, 
under  regulations  prescribed  by  him  with  the  approval  of  the  Secretary,  issue  his 
certificate  releasing  any  or  all  property  of  such  estate  from  the  lien  herein  imposed. 

If  (a)  the  decedent  makes  a transfer  of,  or  creates  a trust 
with  respect  to,  any  property  in  contemplation  of  or  intended 
to  take  effect  in  possession  or  enjoyment  at  or  after  his 
death  (except  in  the  case  of  a bona  fide  sale  for  a fair 
consideration  in  money  or  money’s  worth)  or  (b)  if  insur- 
ance passes  under  a contract  executed  by  the  decedent  in 
favor  of  a specific  beneficiary,  and  if  in  either  case  the  tax 
in  respect  thereto  is  not  paid  when  due,  then  the  transferee, 
trustee,  or  beneficiary  shall  be  personally  liable  for  such  tax,  and  such  property, 
to  the  extent  of  the  decedent’s  interest  therein  at  the  time  of  such  transfer,  or  to  the 
extent  of  such  beneficiary’s  interest  under  such  contract  of  insurance  shall  be  subject 
to  a like  lien  equal  to  the  amount  of  such  tax.  Any  part  of  such  property  sold  by 
such  transferee  or  trustee  to  a bona  fide  purchaser  for  a fair  consideration  in  money 
or  money’s  worth  shall  be  divested  of  the  lien  and  a like  lien  shall  then  attach 
to  all  the  property  of  such  transferee  or  trustee,  except  any  part  sold  to  a bona  fide 
purchaser  for  a fair  consideration  in  money  or  money’s  worth. 

Sec.  410.  That  whoever  knowingly  makes  any  false 
statement  in  any  notice  or  return  required  to  be  filed  under 
this  title  shall  be  liable  to  a penalty  of  not  exceeding  $5,000, 
or  imprisonment  not  exceeding  one  year,  or  both. 

Whoever  fails  to  comply  with  any  duty  imposed  upon 
him  by  Section  404  {par.  311-312),  or,  having  in  his  possession 
or  control  any  record,  file,  or  paper,  containing  or  supposed 
to  contain  any  information  concerning  the  estate  of  the 
decedent,  or,  having  in  his  possession  or  control  any  property 
comprised  in  the  gross  estate  of  the  decedent,  fails  to  exhibit 
the  same  upon  request  to  the  Commissioner  or  any  collector 
or  law  officer  of  the  United  States,  or  his  duly  authorized  deputy  or  agent,  who 
desires  to  examine  the  same  in  the  performance  of  his  duties  under  this  title,  shall  be 
liable  to  a penalty  of  not  exceeding  $500,  to  be  recovered,  with  costs  of  suit,  in  a 
civil  action  in  the  name  of  the  United  States. 

TITLE  V.— TAX  ON  TRANSPORTATION  AND  OTHER  FACILITIES, 
AND  ON  INSURANCE 

323.  Sec.  500.  That  from  and  after  April  1,  1919,  there  shall 

Effective  April  1,  be  levied,  assessed,  collected,  and  paid,  in  lieu  of  the  taxes 
1919.  imposed  by  Section  500  of  the  Revenue  Act  of  1917* — 

*The  same  rates  applied  as  specified  in  this  Act  with  the  following  exceptions,  rate  of  10%  on 
amount  paid  for  seats,  berths,  and  staterooms  in  parlor  and  sleeping  cars  or  on  vessels;  5%  on 
amount  paid  for  transportation  of  oil  by  pipe  line;  tax  of  Sc  on  telephone,  telegraph  or  radio  messages 
for  which  charge  of  15c  or  more  is  imposed,  and  there  was  no  tax  imposed  on  leased  wires  of 
telegraph  and  telephone  companies. 

46 


319. 

Unpaid  tax  lien  for 
10  years  upon  gross 
estate. 


320. 

Transferee,  trustee 
or  beneficiary  per- 
sonally liable  for  por- 
tion of  tax  on  prop- 
erty not  paid  when 
due. 


321. 

Penalties  for  false 
statements. 

322. 

Penalty  for  failure 
to  comply  with  duties 
imposed  or  exhibit 
records,  files  or  pa- 
pers on  request. 


324.  , (a)  A tax  equivalent  to  3 pef  centum  of  the  amount 

3%  on  afUoUnt  paid  paid  for  the  transportation  on  or  after  such  date,  by  rail 
for  transportation  of  or  by  water  or  by  any  form  of  mechanical  motor  power  when 
property  b y freight  in  competition  with  carriers  by  rail  or  water,  of  property  by 

within  U.  S.  freight  transported  from  one  point  in  the  United  States  to 

another ; and  a like  tax  on  the  amount  paid  for  such  trans- 
portation within  the  United  States  of  property  transported  from  a point  without  the 
United  States  to  a point  within  the  United  States ; 

(b)  A tax  of  1 cent  for  each  20  cents  or  fraction  thereof 

of  the  amount  paid  to  any  person  for  the  transportation  on 

or  after  such  date,  by  rail  or  water  or  by  any  form  of 

mechanical  motor  power  when  in  competition  with  express 
by  rail  or  water,  of  any  package,  parcel,  or  shipment,  by 
express,  transported  from  one  point  in  the  United  States  to 

another ; and  a like  tax  on  the  amount  paid  for  such  transportation  within  the  United 
States  of  property  transported  from  a point  without  the  United  States  to  a point 
within  the  United  States; 

(c)  A tax  equivalent  to  8 per  centum  of  the  amount  paid 
for  the  transportation  on  or  after  such  date  of  persons  by 
rail  or  water,  or  by  any  form  of  mechanical  motor  power  on 


325. 

lc  for  each  20c  or 
fraction  of  amount 
paid  for  express  ship- 
ments within  U.  S. 


326. 

8%  on  amount  paid 
for  passenger  trans- 


« + o + ; J5*,  a regular  established  line  when  in  competition  with  carriers 

portarion,  except  , •,  ^ 


commutation  less 
than  30  miles  or  fare 
of  42c. 


by  rail  or  water,  from  one  point  in  the  United  States  to 
another  or  to  any  point  in  Canada  or  Mexico,  where  the 
ticket  or  order  therefor  is  sold  or  issued  in  the  United  States, 
not  including  the  amount  paid  for  commutation  or  season 
tickets  for  trips  less  than  thirty  miles,  or  for  transportation  the  fare  for  which  does 
not  exceed  42  cents : Provided,  That  where  such  water  transportation  lines  are  in 
competition  between  American  ports  with  foreign  water  transportation  lines  from 
adjacent  foreign  ports,  the  tax  imposed  under  this  subdivision  on  amounts  paid  for 
water  transportation  between  American  ports  shall  not  exceed  the  amount  of  the 
transportation  tax  to  which  such  foreign  water  transportation  lines  are  subjected 
by  their  government  corresponding  to  this  tax ; 

(d)  A tax  equivalent  to  8 per  centum  of  the  amount 

327.  paid  for  seats,  berths,  and  staterooms  in  parlor  cars,  sleeping 

8%  on  Pullman  ac-  cars,  or  on  vessels,  used  on  or  after  such  date  in  connection 
commodations.  with  transportation  upon  which  tax  is  imposed  by  subdivision 

(c)  (par.  326 ) ; 

(e)  A tax  equivalent  to  8 per  centum  of  the  amount  paid 
for  the  transportation  on  or  after  such  date  of  oil  by  pipe  line ; 

(f)  In  the  case  of  each  telegraph,  telephone,  cable,  or 
radio,  dispatch,  message,  or  conversation,  which  originates 

Telegraph,  tele-  on  or  after  such  date  within  the  United  States,  and  for  the 
phone,  cable  or  radio  transmission  of  which  the  charge  is  more  than  14  cents  and 
messages  where  not  more  than  50  cents,  a tax  of  5 cents;  and  if  the  charge 
charge  15  to  50c,  tax  is  more  than  50  cents,  a tax  of  10  cents:  Provided,  That 
5c;  over  50c,  tax  10c.  only  one  payment  of  such  tax  shall  be  required,  notwithstand- 
ing the  lines  or  stations  of  one  or  more  persons  are  used 
for  the  transmission  of  such  dispatch,  message,  or  conversation;  and 

(g)  A tax  equivalent  to  10  per  centum  of  the  amount 
paid  after  such  date  to  any  telegraph  or  telephone  company 
for  any  leased  wire  or  talking  circuit  special  service  fur- 
nished after  each  such  date.  This  subdivision  shall  not  apply 
to  the  amount  paid  for  so  much  of  such  service  as  is  utilized 

(1)  in  the  collection  and  dissemination  of  news  through  the  public  press,  or  (2)  in 
the  conduct,  by  a common  carrier  or  telegraph  or  telephone  company,  of  its  business 
as  such. 

(h)  No  tax  shall  be  imposed  under  this  section  upon 
any  payment  received  for  services  rendered  to  the  United 


328. 

8%  on  oil  by  pipe 
lines. 

329. 


330. 

10%  of  amount  paid 
for  leased  wire  or 
talking  circuit. 


331. 


. " States  or  to  any  State  or  Territory  or  the  District  of 

**  ' Columbia.  The  right  to  exemption  under  this  subdivision 

shall  be  evidenced  in  such  manner  as  the  Commissioner,  with  the  approval  of  the 
Secretary,  may  by  regulation  prescribe. 

032  Sec.  501.  (a)  That  the  taxes  imposed  by  Section  500 

Rv  whom  nairl  (Par-  3^3~33i)  shall  be  paid  by  the  person  paying  for  the 

ay  wnom  paid.  services  or  facilities  rendered. 

47 


333.  4 (b)  If  a mileage  book  used  for  transportation  or  accorn- 

Cash  fare  paid  or  modation  was  purchased  before  November  1,  1917,  or  if  cash 
mileage  book  or  com-  fare  is  paid,  the  tax  imposed  by  Section  500  (par.  326-327) 
mutation  purchased  shall  be  collected  from  the  person  presenting  the  mileage 
before  11-1-17.  book,  or  paying  the  cash  fare,  by  the  conductor  or  other 

agent,  when  presented  for  such  transportation  or  accommoda- 
tion, and  the  amount  so  collected  shall  be  paid  to  the  United  States  in  such  manner 
and  at  such  times  as  the  Commissioner,  with  the  approval  of  the  Secretary,  may 
prescribe;  if  a ticket  (other  than  a mileage  book)  was  bought  and  partially  used 
before  November  1,  1917,  it  shall  not  be  taxed,  but  if  bought  but  not  so  used  before 
Section  500  (par.  323)  takes  effect,  it  shall  not  be  valid  for  passage  until  the  tax  has 
been  paid  and  such  payment  evidenced  on  the  ticket  in  such  manner  as  the  Commis- 
sioner, with  the  approval  of  the  Secretary,  may  by  regulation  prescribe. 


334. 

Taxes  apply  when 
services  or  facilities 
rendered  for  hire. 
Carriers  not  receiving 
amount  ordinarily 
charged. 


(c)  The  taxes  imposed  by  Section  500  (par.  323-330 ) 
shall  apply  to  all  services  or  facilities  specified  in  such  section 
when  rendered  for  hire,  whether  or  not  the  agency  rendering 
them  is  a common  carrier.  In  case  a carrier  (other  than  a 
pipe  line)  principally  engaged  in  rendering  transportation 
services  or  facilities  for  hire  does  not,  because  its  ownership 
of  the  goods  transported,  or  for  any  other  reason,  receive 
the  amount  which  as  a carrier  it  would  otherwise  charge, 
such  carrier  shall  pay  a tax  equivalent  to  the  tax  which  would  be  imposed  upon  the 
transportation  of  such  goods  if  the  carrier  received  payment  for  such  transportation, 
such  tax,  if  it  can  not  be  computed  from  actual  rates  or  tariffs  of  the  carrier,  to  be 
computed  on  the  basis  of  the  rates  or  tariffs  of  other  carriers  for  like  services  as 
determined  by  the  Commissioner.  In  the  case  of  any  carrier  (other  than  a pipe  line) 
the  principal  business  of  which  is  to  transport  goods  belonging  to  it  on  its  own 
account  and  which  only  incidentally  renders  services  for  hire,  the  tax  shall  apply  to 
such  services  or  facilities  only  as  are  actually  rendered  by  it  for  hire.  Nothing  in 
this  or  the  preceding  section  shall  be  construed  as  imposing  a tax  (1)  upon  the  trans- 
portation of  any  commodity  which  is  necessary  for  the  use  of  the  carrier  in  the 
conduct  of  its  business  as  such  and  is  intended  to  be  so  used  or  has  been  so  used ; 
or  (2)  upon  the  transportation  of  company  material  transported  by  one  carrier,  which 
constitutes  a part  of  a railroad  system,  for  another  carrier  which  is  also  a part  of 
the  same  system. 


(d)  The  tax  imposed  by  subdivision  (e)  of  Section  500 
(par.  328 ) shall  apply  to  all  transportation  of  oil  by  pipe  line. 
In  case  no  charge  for  transportation  is  made,  by  reason  of 
ownership  of  the  commodity  transported,  or  for  any  other 
reason,  the  person  transporting  by  pipe  line  shall  pay  a tax 
equivalent  to  the  tax  which  would  be  imposed  if  such  person 
received  payment  for  such  transportation,  and  if  the  tax  can 
not  be  computed  from  actual  bona  fide  rates  or  tariffs,  it  shall  be  computed  (1)  on  the 
basis  of  the  rates  or  tariffs  of  other  pipe  lines  for  like  services,  as  determined  by  the 
Commissioner,  or  (2)  if  no  such  rates  or  tariffs  exist,  on  the  basis  of  a reasonable 
charge  for  such  transportation,  as  determined  by  the  Commissioner. 

Sec.  502.  That  each  person  receiving  any  payments  re- 
ferred to  in  Section  500  (par.  323~33o)  shall  collect  the  amount 
of  the  tax,  if  any,  imposed  by  such  section  from  the  person 
making  such  payments,  and  shall  make  monthly  returns  under 
oath,  in  duplicate,  and  pay  the  taxes  so  collected  and  the 
taxes  imposed  upon  it  under  subdivision  (c)  (par.  334)  or  (d)  (par.  333)  of  Section 
501  to  the  collector  of  the  district  in  which  the  principal  office  or  place  of  business 
is  located. 

No  carrier  collecting  the  taxes  imposed  by  subdivision  (a) 
or  (b)  of  Section  500  (par.  324-325),  shall  be  required  to 
list  the  amount  of  such  tax  separately  in  any  bill  of  lading, 
freight  or  express  receipt,  or  other  similar  document,  if  the 
total  amount  of  the  transportation  charge  and  the  tax  is  stated  therein. 


335. 

Tax  applies  to  all 
transportation  of  oil 
by  pipe  line  whether 
payment  received  by 
carrier  or  not. 


336. 

Monthly  returns  to 
be  made  in  duplicate 
to  collector. 


337. 

Separate  listing  of 
tax  not  required. 


338. 

Amounts  refunded 
credited  o n subse- 
quent returns. 


Any  person  making  a refund  of  any  payment  upon  which 
tax  is  collected  under  this  section  may  repay  therewith  the 
amount  of  the  tax  collected  on  such  payment;  and  the 
amount  so  repaid  may  be  credited  against  amounts  included 
in  any  subsequent  monthly  return. 


48 


The  returns  required  under  this  section  shall  contain 
such  information,  and  be  made  at  such  times  and  in  such 
manner,  as  the  Commissioner,  with  the  approval  of  the  Sec- 
retary, may  by  regulation  prescribe. 

The  tax  shall,  without  assessment  by  the  Commissioner 
or  notice  from  the  collector,  be  due  and  payable  to  the  col- 
lector at  the  time  so  fixed  for  filing  the  return.  If  the  tax 

is  not  paid  when  due,  there  shall  be  added  as  part  of  the  tax 
a penalty  of  5 per  centum,  together  with  interest  at  the  rate 

of  1 per  centum  for  each  full  month,  from  the  time  when  the  tax  became  due. 

Insurance 

Sec.  503.  That  from  and  after  April  1,  1919,  there  shall 
be  levied,  assessed,  collected,  and  paid,  in  lieu  of  the  taxes 
imposed  by  Section  504  of  the  Revenue  Act  of  1917*,  the 
following  taxes  on  the  issuance  of  insurance  policies,  includ- 
ing, in  the  case  of  policies  issued  outside  the  United  States 
(except  those  taxable  under  sul  division  15  of  Schedule  A of 
Title  XI  (par.  609-610),  their  delivery  within  the  United  States  by  any  agent  or  broker, 
whether  acting  for  the  insurer  or  the  insured;  such  taxes  to  be  paid  by  the  insurer, 
or  by  such  agent  or  broker : 

(a)  Life  insurance:  A trx  equivalent  to  8 cents  on  each 
$100  or  fractional  part  thereof  of  the  amount  for  which  any 
life  is  insured  under  any  policy  of  insurance,  or  other  in- 
strument, by  whatever  name  the  same  is  called : Provided, 
that  on  all  policies  for  life  insurance  only  by  which  a life 
is  insured  not  in  excess  of  $500,  issued  on  the  industrial  or 
weekly  or  monthly  payment  plan  of  insurance,  the  tax  shall 
be  40  per  centum  of  the  amount  of  the  first  weekly  premium 
or  20  per  centum  of  the  amount  of  the  first  monthly  premium, 

as  the  case  may  be:  Provided  further,  that  on  policies  of  group  life  insurance,  cover- 
ing groups  of  not  less  than  25  lives  in  the  employ  of  the  same  person,  for  the  benefit 
of  persons  other  than  the  employer,  the  tax  shall  be  equivalent  to  4 cents  on  each 
$100  of  the  aggregate  amount  for  which  the  group  policy  is  issued  and  of  any  net 
increase  in  the  amount  of  the  insurance  under  such  policy:  And  provided  further, 
that  on  all  policies  covering  life,  health,  and  accident  insurance  combined  in  one  policy 
by  which  a life  is  insured  not  in  excess  of  $500,  issued  on  the  industrial,  or  weekly  or 
monthly  payment  plan  of  insurance,  the  tax  shall  be  40  per  centum  of  the  amount  of 
the  first  weekly  premium  or  20  per  centum  of  the  amount  of  the  first  monthly  premium, 
as  the  case  may  be ; 

(b)  Marine,  inland  and  fire  insurance:  A tax  equivalent 
to  1 cent  on  each  dollar  or  fractional  part  thereof  of  the 
premium  charged  under  each  policy  of  insurance  or  other 
instrument  by  whatever  name  the  same  is  called  whereby  in- 
surance is  made  or  renewed  upon  property  of  any  description 
(including  rents  or  profits),  whether  against  peril  by  sea  or 

inland  waters,  or  by  fire  or  lightning,  or  other  peril ; 


339. 

Returns 


340. 

Tax  due  when  re- 
turns filed.  Penalty 
for  non-payment. 


341. 

Tax  on  insurance 
policies  effective 
4-1-19  including  de- 
liveries in  U.  S. 


342. 

Life  insurance  8c 
on  each  $100  or  frac- 
tion. Policies  on  in- 
dustrial, weekly  or 
monthly  payment 
plan.  Group  life  in- 
surance. 


343. 

Marine,  inland  and 
fire  insurance  lc  on 
each  $1  or  fraction  of 
premium. 


344 

Casualty  insurance 
lc  on  each  $1  or  frac- 
tion of  premium 
charged  under  each 
policy  or  renewal. 


(c)  Casualty  insurance:  A tax  equivalent  to  1 cent  on 
each  dollar  or  fractional  part  thereof  of  the  premium  charged 
under  each  policy  of  insurance  or  obligation  of  the  nature  of 
indemnity  for  loss,  damage,  or  liability  (except  bonds  and 
policies  taxable  under  subdivision  2 of  Schedule  A of  Title 
XI  (par.  592)  issued  or  executed  or  renewed  by  any  person 

transacting  the  business  of  employer’s  liability,  workmen’s  compensation,  accident, 
health,  tornado,  plate  glass,  steam  boiler,  elevator,  burglary,  automatic  sprinkler,  auto- 
mobile, or  other  branch  of  insurance  (except  life  insurance,  and  insurance  described 
and  taxed  in  the  preceding  subdivision)  : Provided,  that  in  case  of  policies  of  insur- 
ance issued  on  the  industrial  or  weekly  or  monthly  payment  plan  the  tax  shall  be  40 
per  centum  of  the  amount  of  the  first  weekly  premium  or  20  per  centum  of  the 
amount  of  the  first  monthly  premium,  as  the  case  may  be; 

(d)  Policies  issued  by  any  corporation  enumerated  in 

**  p . Section  231  (par.  128-142),  and  policies  of  reinsurance,  shall 

exemptions.  be  exempt  from  the  taxes  imposed  by  this  section. 

*The  rates  are  the  same  as  specified  in  this  Act,  but  Act  of  1917  did  not  make  the  special 
provisions  for  policies  of  life  insurance  issued  on  monthly  payment  plan  or  in  case  of  group  life 
insurance  and  the  limitation  in  case  of  casualty  insurance  policies  issued  on  industrial  or  weekly  or 
monthly  payment  plan. 


49 


347. 

Tax  to  be  paid 
when  return  due. 
Penalties  for  non- 
payment. 


346.  Sec.  504.  That  every  person  issuing  policies  of  insurance 

Monthly  returns  in  upon  the  issuance  of  which  a tax  is  imposed  by  Section  503 
duplicate  made  to  {par.  341-345)  shall  make  monthly  returns  under  oath,  in 
collector.  duplicate,  and  pay  such  tax  to  the  collector  of  the  district  in 

which  the  principal  office  or  place  of  business  of  such  person 
is  located.  Such  returns  shall  contain  such  information  and  be  made  at  such  times 
and  in  such  manner  as  the  Commissioner,  with  the  approval  of  the  Secretary,  may  by 
regulation  prescribe. 

The  tax  shall,  without  assessment  by  the  Commissioner 
or  notice  from  the  collector,  be  due  and  payable  to  the  col- 
lector at  the  time  so  fixed  for  filing  the  return.  If  the  tax 

is  not  paid  when  due,  there  shall  be  added  as  part  of  the  tax 
a penalty  of  5 per  centum,  together  with  interest  at  the  rate 

of  1 per  centum  for  each  full  month,  from  the  time  when  the  tax  became  due. 

TITLE  VI.— TAX  ON  BEVERAGES 

348.  Sec.  600.  (a)  That  there  shall  be  levied  and  collected  on 

Tax  on  distilled  all  dir.tilled  spirits  now  in  bond  or  that  have  been  or  that  may 
spirits.  be  hereafter  produced  in  or  imported  into  the  United  States, 

except  such  distilled  spirits  as  are  subject  to  the  tax  provided 
in  Section  604  {par.  359),  in  lieu  of  the  internal-revenue  taxes  now  imposed  thereon 
by  law*,  a tax  of  $2.20  (or,  if  withdrawn  for  beverage  purposes  or  for  use  in  the 
manufacture  or  production  of  any  article  used  or  intended  for  use  as  a beverage,  a 
tax  of  $6.40)  on  each  proof  gallon,  or  wine  gallon  when  below  proof,  and  a propor- 
tionate tax  at  a like  rate  on  all  fractional  parts  of  such  proof  or  wine  gallon,  to  be 
paid  by  the  distiller  or  importer  when  withdrawn,  and  collected  under  the  provisions 
of  existing  law. 

(b)  That  the  tax  imposed  by  subdivision  (a)  {par.  348) 
on  distilled  spirits  intended  for  beverage  purposes  shall  not 
be  due  or  payable  on  such  spirits  while  stored  in  any  dis- 
tillery, bonded  warehouse,  or  special  or  general  bonded 
warehouse,  and  which,  pursuant  to  any  Act  of  Congress  or 
proclamation  of  the  President  of  the  United  States,  can  not 
be  lawfully  sold  or  removed  from  any  such  warehouse  during  the  period  of  pro- 
hibition fixed  by  such  Act  or  proclamation;  and  all  warehousing  bonds  or  trans- 
portation and  warehousing  bonds  conditioned  for  the  payment  of  tax  on  any  such 
spirits  so  stored  on  the  date  such  prohibition  takes  effect  shall  as  to  all  such 
spirits  actually  so  stored  be  canceled  and  discharged,  provided  the  distiller  of 
such  spirits  shall  in  lieu  of  such  bonds  and  prior  to  their  cancellation  execute  a 
bond  in  a penal  sum  of  not  less  than  $10,000,  with  sureties  satisfactory  to  the  col- 
lector of  the  district,  conditioned  that  the  principal  shall,  during  the  period  of  such 
prohibition,  safely  keep  or  cause  to  be  kept  in  good  condition  all  such  spirits  and 
the  warehouse  in  which  the  same  are  stored,  and  shall  not  remove  or  suffer  to  be 
removed  from  warehouse,  contrary  to  law,  any  such  spirits  during  the  period  of 
such  prohibition;  and  the  bond  herein  prescribed  shall  be  in  such  further  sum  and 
shall  contain  such  further  conditions  as  the  Commissioner,  with  the  approval  of 
the  Secretary,  may  by  regulations  require.  The  distiller  may,  subject  to  the  pro- 
visions of  this  section,  be  permitted  to  retain  in  any  such  bonded  warehouse  dis- 
tilled spirits  on  which,  under  the  terms  of  any  existing  bond,  the  tax  imposed 
thereon  becomes  due  and  pa  able  prior  to  the  date  such  prohibition  takes  effect: 
Provided , That  on  the  removal  of  such  prohibition  the  distiller  shall,  as  to  ajl  spirits 
as  to  which  the  bonded  period  fixed  by  law  has  not  expired  and  which  remain 
stored  in  warehouse,  execute  new  and  satisfactory  bond  in  the  form  required  by 
existing  law,  conditioned  for  the  payment  of  the  tax  on  all  such  spirits;  and  all 
provisions  of  existing  law  relating  to  such  bonded  warehouses,  or  the  storage  of 
spirts  therein,  or  to  the  execution  of  new  or  additional  bonds,  so  far  as  applicable, 
shall  continue  in  force  as  to  all  distilled  spirits  rebonded  under  the  provisions  of 
this  section. 

Upon  the  withdrawal  of  distilled  spirits  from  bonded 
3 a jj.  • warehouse,  after  the  period  of  prohibition  has  ended,  and 

Additional  a 1 low-  un(jer  the  conditions  imposed  by  Section  50  of  an  Act 
ance  tor  loss  by  rea-  entitled  “An  Act  to  reduce  taxation,  to  provide  revenue  for 
son  ot  longer  storage.  the  SUpp0rt  Gf  the  Government,  and  for  other  purposes,” 
approved  August  28,  1894,  an  allowance  for  loss  by  leakage  or  other  unavoidable 
cause,  not  exceeding  one  proof  gallon  as  to  packages  of  a capacity  of  not  less 


349. 

Not  applicable  to 
distilled  spirits  stored 
during  period  of  pro- 
hibition. 


*Tax  of  $2.20  and  if  withdrawn  for  beverage  purposes  $3.20. 

50 


351. 

Bonded  period  ex 
tended. 


than  40  wine  gallons,  may  be  made  in  addition  to  that  provided  in  said  Section  50, 
as  amended;  and  a like  additional  allowance  of  one  proof  gallon  as  to  each  package 
withdrawn  may  be  made  for  each  period  of  four  months,  or  fraction  thereof,  for 
such  spirits  as  shall  have  remained  in  warehouse  during  the  period  of  prohibition 
and  after  the  expiration  of  the  maximum  leakage  period  fixed  by  that  section. 

Under  regulations  prescribed  by  the  Secretary,  any 
imported  distilled  spirits,  wines  or  other  liquors  which 
may  be  in  any  customs  bonded  warehouse  under  the  cus- 
toms laws  on  the  date  such  prohibition  takes  effect  shall  be 
permitted  to  remain  therein  without  payment  of  any  taxes  or  duties  thereon, 
beyond  the  three-year  period  provided  in  Section  2971  of  the  Revised  Statutes, 
during  such  period  of  prohibition;  and  may  be  exported  at  any  time  during  such 
extended  period.  Any  imported  spirits,  wines  or  other  liquors  as  to  which  the 
three-year  bonded  period  may  expire  after  the  passage  of  this  Act  and  prior  to 
the  date  such  prohibition  takes  effect  may  at  the  option  of  the  owner  remain  in 
bond  during  such  period  of  prohibition. 

(c)  In  lieu  of  the  internal-revenue  tax  now  imposed 
.p  r thereon  by  law*  there  shall  be  levied  and  collected  upon 

i a x o n ir'eriumes  ajj  perfumes  hereafter  imported  into  the  United  States 
fry'll  H F^tainmg  containing  distilled  spirits,  a tax  of  $1.10  per  wine  gallon, 
distilled  spirits.  and  a proportionate  tax  at  a like  rate  on  all  fractional  parts 

of  such  wine  gallon.  Such  tax  shall  be  collected  by  the  collector  of  customs  and 
deposited  as  internal-revenue  collections,  under  such  rules  and  regulations  as  the 
Commissioner,  with  the  approval  of  the  Secretary,  may  prescribe. 

223  _ Sec.  601.  That  no  distilled  spirits  produced  after 


Importation  of  bev- 
erage spirits  limited. 


354. 

Packages  filled 
from  receiving  cis- 
terns  at  registered 
distilleries.  Transfer 
of  such  spirits. 


October  3,  1917,  shall  be  imported  into  the  United  States 
from  any  foreign  country,  or  from  the  Virgin  Islands 
(unless  produced  from  products  the  growth  of  such  islands, 
and  not  then  into  any  State  or  Territory  or  District  of  the  United  States  in 
which  the  manufacture  or  sale  of  intoxicating  liquor  is  prohibited),  or  from  Porto 
Rico,  or  the  Philippine  Islands.  Under  such  rules,  regulations,  and  bonds  as  the 
Secretary  may  prescribe,  the  provisions  of  this  section  shall  not  apply  to  distilled 
spirits  imported  for  other  than  (1)  beverage  purposes  or  (2)  use  in  the  manu- 
facture or  production  of  any  article  used  or  intended  for  use  as  a beverage. 

Sec.  602.  That  at  registered  distilleries  producing 
alcohol,  or  other  high-proof  spirits,  packages  may  be  filled 
with  such  spirits  reduced  to  not  less  than  one  hundred 
proof  from  the  receiving  cisterns  and  tax  paid  without 
being  entered  into  bonded  warehouse.  Such  spirits  may  be 
also  transferred  from  the  receiving  cisterns  at  such  dis- 
tilleries, by  means  of  pipe  lines,  direct  to  storage  tanks  in 
the  bonded  warehouse  and  may  be  warehoused  in  such  storage  tanks.  Such 
spirits  may  be  also  transferred  in  tanks  or  tank  cars  to  general  bonded  ware- 
houses for  storage  therein,  either  in  storage  tanks  in  such  warehouses  or  in  the 
tanks  in  which  they  were  transferred.  Such  spirits  may  also  be  transferred  from 
receiving  cisterns  or  warehouse  storage  tanks  to  barrels,  drums,  tanks,  tank  cars, 
or  other  approved  containers,  and  may  be  transported  in  such  containers  for 
exportation  or  other  lawful  purposes.  The  Commissioner,  with  the  approval  of 
the  Secretary,  is  hereby  empowered  to  prescribe  all  necessary  regulations  relating 
to  the  drawing  off,  transferring,  gauging,  storing,  and  transporting  of  such  spirits; 
the  records  to  be  kept  and  returns  to  be  made;  the  size  and  kind  of  packages  and 
tanks  to  be  used;  the  marking,  branding,  numbering,  and  stamping  of  such 
packages  and  tanks;  the  kinds  of  stamps,  if  any,  to  be  used;  and  the  time  and 
manner  of  paying  the  tax;  the  kind  of  bond  and  the  penal  sum  of  same.  The  tax 
prescribed  by  law  must  be  paid  before  such  spirits  are  removed  from  the  distillery 
premises,  or  from  general  bonded  warehouse  in  the  case  of  spirits  transferred 
thereto,  except  as  otherwise  provided  by  law. 

Under  such  regulations  as  the  Commissioner,  with  the 
approval  of  the  Secretary,  may  prescribe,  distilled  spirits 
may  hereafter  be  drawn  from  receiving  cisterns  and 
deposited  in  distillery  warehouses  without  having  affixed 
to  the  packages  containing  the  same,  distillery  warehouse 
stamps,  and  such  packages,  when  so  deposited  in  warehouse,  may  be  withdrawn 
therefrom  on  the  original  gauge  where  the  same  have  remained  in  such  ware- 
house for  a period  not  exceeding  thirty  days  from  the  date  of  deposit. 


355. 

Temporary  ware- 
housing without 
stamps. 


#Tax  same  as  specified  in  this  Act. 


51 


357. 

Ethyl  alcohol  for 


other  non-beverage 
purposes. 


356.  Under  such  regulations  as  the  Commissioner,  with  the 

Ethyl  and  dena-  approval  of  the  Secretary,  may  prescribe,  the  manufacture, 
tured  alcohol.  warehousing,  withdrawal,  and  shipment,  under  the  pro- 

visions of  existing  law,  of  ethyl  alcohol  for  other  than  (1) 
beverage  purposes  or  (2)  use  in  the  manufacture  or  production  of  any  article  used 
or  intended  for  use  as  a beverage,  and  denatured  alcohol,  may  be  exempted  from 
the  provisions  of  Section  3283  of  the  Revised  Statutes. 

The  Commissioner,  with  the  approval  of  the  Secretary, 

may  by  regulations  exempt  distillers  of  ethyl  alcohol,  for 

use* in*  production * of  use  *n  t^ie  Pr°duction  of  munitions  of  war,  or  for  other  non- 

mimifinne  nf  r»r  beverage  purposes,  from  so  much  of  the  provisions  of  Sec- 
munitions  ot  war  or  tions  3285>  Qr  33()9  of  the  Revised  Statues>  and  Acts 

amendatory  thereof,  respecting  the  survey  of  distilleries, 
the  period  of  fermentation,  the  filling  and  emptying  of  fer- 
menting tubs,  and  assessments,  as,  in  his  judgment,  may  be  expedient:  Provided, 
That  the  bond  prescribed  in  Section  3260  of  the  Revised  Statutes  shall,  in  the  cases 
herein  provided,  be  in  such  sum  and  contain  such  further  conditions  as  the  Com- 
missioner may  require. 

Sec.  603.  That  under  such  regulations  as  the  Com- 
,oi  missioner,  with  the  approval  of  the  Secretary,  may  pre- 

alc  h i°  ° y scribe,  ethyl  alcohol  of  not  less  than  180  degrees  proof, 
° ° ’ produced  at  any  central  distilling  and  denaturing  plant 

established  under  the  provisions  of  subsection  2,  paragraph  N,  of  Section  IV 
of  the  Act  entitled  “An  Act  to  reduce  tariff  duties  and  to  provide  revenue  for 
the  Government,  and  for  other  purposes,”  approved  October  3,  1913,  may  be 
removed  from  such  plant  to  any  central  denaturing  bonded  warehouse  for 
denaturation,  or  may,  before  or  after  denaturation  be  removed  from  such  plant 
or  from  such  denaturing  bonded  warehouse,  free  of  tax,  for  use  of  the  United 
States  or  for  shipment  to  any  nation  while  engaged  against  the  German  Govern- 
ment in  the  present  war,  and  the  removal  herein  authorized  may  be  made  in 
such  tank  vessels,  tank  cars,  drums,  casks,  or  other  containers  as  may  be  approved 
by  the  Commissioner.  It  shall  be  lawful,  under  regulation  prescribed  by  the 
Commissioner,  with  the  approval  of  the  Secretary,  for  an  allowance  to  be  made 
for  leakage  or  loss  by  unavoidable  accident  and  without  fault  or  negligence  of 
the  distiller,  owner,  carrier,  or  his  agents  or  employees,  which  may  occur  during 
the  transportation  of  such  spirits  or  while  the  same  are  lawfully  stored  on  either 
of  the  premises  herein  described. 

__  Sec.  604.  That  upon  all  distilled  spirits  produced  in 

,.  or  imported  into  the  United  States  upon  which  the  in- 
/?°r*  °n  aiS"  ternal-revenue  tax  now  imposed  by  law  has  been  paid, 
tilled  spirits.  and  on  the  day  after  the  passage  of  this  Act, 

are  held  by  any  person  and  intended  for  sale  or  for  use  in  the  manufacture  or 
production  of  any  article  intended  for  sale,  there  shall  be  levied,  assessed,  col- 
lected, and  paid  a floor  tax  of  $3.20  if  intended  for  sale  for  beverage  purposes 
or  for  use  in  the  manufacture  or  production  of  any  article  used  or  intended  for 
use  as  a beverage  on  each  proof  gallon,  and  a proportionate  tax  at  a like  rate 
on  all  fractional  parts  of  such  proof  gallon. 

Sec.  605.  That  in  addition  to  the  tax  imposed  by  this 
Act  on  distilled  spirits  and  wines,  there  shall  be  levied, 
assessed,  collected,  and  paid  in  lieu  of  the  tax  imposed 
by  Section  304  of  the  Revenue  Act  of  1917*,  a tax  of  30 
cents  on  each  proof  gallon  and  a proportionate  tax  at  a 
like  rate  on  all  fractional  parts  of  such  proof  gallon  on 
all  distilled  spirits  or  wines  hereafter  rectified,  purified,  or  refined  in  such  man- 
ner, and  on  all  mixtures  hereafter  produced  in  such  manner,  that  the  person  so 
rectifying,  purifying,  refining,  or  mixing  the  same  is  a rectifier  within  the  mean- 
ing of  Section  3244  of  the  Revised  Statutes,  as  amended:  Provided,  that  this  tax 
shall  not  apply  to  gin  produced  by  the  redistillation  of  a pure  spirit  over  juniper 
berries  and  other  aromatics. 

Upon  all  such  articles  heretofore  produced,  and  which 
r ic  on  the  day  after  the  passage  of  this  Act  are  held  by  any 
^ f°r  ii  X 0t  15C  Person  and  intended  for  sale,  there  shall  be  levied,  assessed, 
proot  gallon.  collected,  and  paid  a floor  tax  of  15  cents  on  each  proof 

gallon,  and  a proportionate  tax  at  a like  rate  on  all  fractional  parts  of  each 
proof  gallon;  and  all  such  distilled  spirits  so  held  and  not  contained  in  the 
•Rate  of  15c  per  proof  gallon. 


360. 

Additional  tax  on 
distilled  spirits  or 
wines  rectified,  puri- 
fied or  refined. 


52 


362. 

Unlawful  to  reduce 
in  proof  or  increase 
volume  of  tax  paid 
spirits  or  wines. 


distillers’  original  stamped  packages,  or  in  bottles  or  other  containers  bearing 
the  distillers’  original  labels,  shall  for  the  purpose  of  this  section  be  regarded 
as  rectified  spirits. 

When  the  process  of  rectification  is  completed  and 
the  taxes  prescribed  by  this  section  have  been  paid,  it  shall 
be  unlawful  for  the  rectifier  or  other  dealer  to  reduce  in 
proof  or  increase  in  volume  such  spirits  or  wine  by  the 
addition  of  water  or  other  substance;  nothing  herein  con- 
tained shall,  however,  prevent  a rectifier  from  using  again 
in  the  process  of  rectification  spirits  already  rectified  and  upon  which  the  taxes 
have  theretofore  been  paid. 

The  taxes  imposed  by  this  section  shall  not  attach 
rA  , r , , to  cordials  or  liqueurs  on  which  a tax  is  imposed  and 
lax  not  applicable.  paid  under  Section  6n  (/)ar  375-37s)  or  613  (par.  381-385), 

nor  to  the  mixing  and  blending  of  wines,  where  such  blending  is  for  the  sole 
purpose  of  perfecting  such  wines  according  to  commercial  standards,  nor  to 
blends  made  exclusively  of  two  or  more  pure  straight  whiskies  aged  in  wood 
for  a period  not  less  than  four  years  and  without  the  addition  of  coloring  or 
flavoring  matter  or  any  other  substance  than  pure  water  and  if  not  reduced  below 
ninety  proof:  Provided,  That  such  blended  whiskies  shall  be  exempt  from  tax 
under  this  section  only  when  compounded  under  the  immediate  supervision  of 
a revenue  officer,  in  such  tanks  and  under  such  conditions  and  supervision  as 
the  Commissioner,  with  the  approval  of  the  Secretary,  may  prescribe. 

All  distilled  spirits  or  wines  taxable  under  this  section 
cniritc  shall  be  subject  to  uniform  regulations  concerning  the 
k * + +■  S 1 'f  T S use  thereof  in  the  manufacture,  blending,  compounding, 

S ull  t^ttOU  1 ° m mixing,  marking,  branding,  and  sale  of  whiskey  and  recti- 
regu  ations.  fied  spirj^s>  an(j  no  discrimination  whatsoever  shall  be 

made  by  reason  of  a difference  in  the  character  of  the  material  from  which  same 
may  have  been  produced. 

365.  The  business  of  a rectifier  of  spirits  shall  be  carried  on,  and  the  tax  on 
rectified  spirits  shall  be  paid,  under  such  rules,  regulations,  and  bonds  as  may 
be  prescribed  by  the  Commissioner,  with  the  approval  of  the  Secretary. 

Whoever  violates  any  of  the  provisions  of  this  sec- 
tion  shall  be  deemed  to  be  guilty  of  a misdemeanor  and, 
upon  conviction,  shall  be  fined  not  more  than  $1,000  or 
imprisoned  not  more  than  two  years,  and  shall,  in  addition,  be  liable  to  double 
the  tax  evaded,  together  with  the  tax,  to  be  collected  by  assessment  or  on  any 
bond  given. 

Sec.  606.  That  hereafter  collectors  shall  not  furnish 
wholesale  liquor  dealer’s  stamps  in  lieu  of  and  in  exchange 
for  stamps  for  rectified  spirits  unless  the  package  covered 
by  stamp  for  rectified  spirits  is  to  be  broken  into  smaller 
packages. 

The  Commissioner,  with  the  approval  of  the  Secre- 
tary, is  authorized  to  discontinue  the  use  of  the  follow- 
ing stamps  whenever  in  his  judgment  the  interests  of  the 
Government  will  be  subserved  thereby: 

Distillery  warehouse,  special  bonded  warehouse,  special  bonded  reware- 


367. 

When  wholesale 
liquor  dealer’s  stamps 
furnished. 

368. 

Stamp  discontinue 
authorized. 

369. 

house,  general  bonded  warehouse,  general  bonded  retransfer,  transfer  brandy, 
export  tobacco,  export  cigars,  export  oleomargarine,  and  export  fermented-liquor 
stamps. 

Sec.  607.  That  the  Commissioner,  with  the  approval 
of  the  Secretary,  is  hereby  authorized  to  require  at  dis- 
tilleries, breweries,  rectifying  houses,  and  wherever  else 
in  his  judgment  such  action  may  be  deemed  advisable, 
the  installation  of  meters,  tanks,  pipes,  or  any  other  apparatus  for  the  purpose 
of  protecting  the  revenue,  and  such  meters,  tanks,  and  pipes  and  all  necessary 
labor  incident  thereto  shall  be  at  the  expense  of  the  person  on  whose  premises 
the  installation  is  required.  Any  such  person  refusing  or  neglecting  to  install 
such  apparatus  when  so  required  by  the  Commissioner  shall  not  be  permitted 
to  conduct  business  on  such  premises. 

371.  Sec.  608.  That  there  shall  be  levied  and  collected  on 

Beer,  lager  beer,  all  beer,  lager  beer,  ale,  porter,  and  other  similar  fer- 

53 


370. 

Installation  of  ap- 
paratus. 


ale,  porter  and  sim-  mented  liquor,  containing  one-half  of  one  per  centum,  or 
ilar  fermented  liquor,  more,  of  alcohol,  brewed  or  manufactured  and  hereafter 
sold,  or  removed  for  consumption  or  sale,  within  the  United 
States,  by  whatever  name  such  liquors  may  be  called,  in  lieu  of  the  internal- 
revenue  taxes  now  imposed  thereon  by  law*,  a tax  of  $6.00  for  every  barrel  con- 
taining not  more  than  thirty-one  gallons,  and  at  a like  rate  for  any  other 
quantity  or  for  the  fractional  parts  of  a barrel  authorized  and  defined  by  law, 
to  be  collected  under  the  provisions  of  existing  law. 

272  Sec.  609.  That  from  and  after  the  passage  of  this  Act 
PprmpntpH  linnnrc  taxable  fermented  liquors  may  be  conveyed  without  pay- 

conveved  q ment  of  tax  from  the  brewery  premises  where  produced 

y to  a contiguous  industrial  distillery  of  either  class  estab- 

lished under  the  Act  entitled  “An  Act  to  reduce  tariff  duties  and  to  provide 
revenue  for  the  Government,  and  for  other  purposes,”  approved  October  3,  1913, 
to  be  used  as  distilling  material,  and  the  residue  from  such  distillation,  con- 
taining less  than  one-half  of  1 per  centum  of  alcohol  by  volume,  which  is  to  be 
used  in  making  beverages,  may  be  manipulated  by  cooling,  flavoring,  carbonating, 
settling,  and  filtering  on  the  distillery  premises  or  elsewhere. 

273  The  removal  of  the  taxable  fermented  liquor  from  the 

Qnnprtricinn  brewery  to  the  distillery  and  the  operation  of  the  distillery 

mov^j  " and  removal  of  the  residue  therefrom  shall  be  under  the 

supervision  of  such  officer  or  officers  as  the  Commissioner 
shall  deem  proper,  and  the  Commissioner,  with  the  approval  of  the  Secretary, 
is  hereby  authorized  to  make  such  regulations  from  time  to  time  as  may  be 
necessary  to  give  force  and  effect  to  this  section  and  to  safeguard  the  revenue. 
374  Sec.  610.  That  natural  wine  within  the  meaning  of 

fural  Win,*”  this  Act  shall  be  deemed  to  be  the  produce  made  from 
£nej  ‘ the  normal  alcoholic  fermentation  of  the  juice  of  sound, 

ripe  grapes,  without  addition  or  abstraction,  except  such 
as  may  occur  in  the  usual  cellar  treatment  of  clarifying  and  aging:  Provided, 
howe'ver,  that  the  product  made  from  the  juice  of  sound,  ripe  grapes  by  com- 
plete fermentation  of  the  must  under  proper  cellar  treatment  and  corrected  by 
the  addition  (under  the  supervision  of  a gauger  or  storekeeper-gauger  in  the 
capacity  of  gauger)  of  a solution  of  water  and  pure  cane,  beet,  or  dextrose  sugar 
(containing,  respectively,  not  less  than  95  per  centum  of  actual  sugar,  calculated 
on  a dry  basis)  to  the  must  or  to  the  wine,  to  correct  natural  deficiencies,  when 
such  addition  shall  not  increase  the  volume  of  the  resultant  product  more  than 
35  per  centum,  and  the  resultant  product  does  not  contain  less  than  five  parts 
per  thousand  of  acid  before  fermentation  and  not  more  than  13  per  centum  of 
alcohol  after  complete  fermentation,  shall  be  deemed  to  be  wine  within  the 
meaning  of  this  Act,  and  may  be  labeled,  transported,  and  sold  as  “wine,” 
qualified  by  the  name  of  the  locality  where  produced,  and  may  be  further  quali- 
fied by  the  name  of  its  own  particular  type  or  variety:  And  provided  further, 
that  wine  as  defined  in  this  section  may  be  sweetened  with  cane  sugar  or  beet 
sugar  or  pure  condensed  grape  must  and  fortified  under  the  provisions  of  this 
Act,  and  wines  so  sweetened  or  fortified  shall  be  considered  sweet  wine  within 
the  meaning  of  this  Act. 

Sec.  611.  That  upon  all  still  wines,  including  vermuth, 
and  all  artificial  or  imitation  wines  or  compounds  sold  as 
still  wine,  which  are  hereafter  produced  in  or  imported 
into  the  United  States,  or  which  on  the  day  after  the 
passage  of  this  Act  are  on  any  winery  premises  or  other 
bonded  premises  or  in  transit  thereto  or  at  any  custom- 
house, there  shall  be  levied,  collected,  and  paid,  in  lieu  of  the  internal-revenue 
taxes  now  imposed  thereon  by  law**,  taxes  at  rates  as  follows,  when  sold,  or 
removed  for  consumption  or  sale: 

376.  On  wines  containing  not  more  than  14  per  centum  of  absolute  alcohol, 
16  cents  per  wine  gallon,  the  per  centum  of  alcohol  taxable  under  this  section 
to  be  reckoned  by  volume  and  not  by  weight; 

377.  On  wines  containing  more  than  14  per  centum  and  not  exceeding  21  per 
centum  of  absolute  alcohol,  40  cents  per  wine  gallon; 

378.  On  wines  containing  more  than  21  per  centum  and  not  exceeding  24  per 
centum  of  absolute  alcohol,  $1  per  wine  gallon; 


375. 

Still  wines,  ver- 
m u t h,  artificial  or 
imitation  wines  or 
compounds. 


•Rate  of  $3.00  per  barrel. 

••Rates  one-half  those  specified  in  this  Act. 


54 


380. 

Withdrawal  of 
grape  brandy  or  wine 
spirits  for  fortifica- 
tion of  wines.  Tax 
of  60c  proof  gallon. 


379.  All  such  wines  containing  more  than  24  per  centum  of  absolute  alcohol 
by  volume  shall  be  classed  as  distilled  spirits  and  shall  pay  tax  accordingly. 

Sec.  612.  That  under  such  regulations  and  official 
supervision  and  upon  the  giving  of  such  notices,  entries, 
bonds,  and  other  security  as  the  Commissioner,  with  the 
approval  of  the  Secretary,  may  prescribe,  any  producer 
of  wines  defined  under  the  provisions  of  this  title,  may 
withdraw  from  any  fruit  distillery  or  special  bonded  ware- 
house grape  brandy,  or  wine  spirits,  for  the  fortification 
of  such  wines  on  the  premises  where  actually  made:  Provided , that  there  shall 
be  levied  and  assessed  against  the  producer  of  such  wines  a tax  (in  lieu  of  the 
internal-revenue  tax  now  imposed  there  by  law*)  of  60  cents  per  proof  gallon 
of  grape  brandy  or  wine  spirits  whenever  withdrawn  and  hereafter  so  used  by 
him  in  the  fortification  of  such  wines  during  the  preceding  month,  which  assess- 
ment shall  be  paid  by  him  within  ten  months  from  the  date  of  notice  thereof: 
Provided  further,  that  nothing  contained  in  this  section  shall  be  construed  as 
exempting  any  wines,  cordials,  liqueurs,  or  similar  compounds  from  the  pay- 
ment of  any  tax  provided  for  in  this  title. 

Sec.  613.  That  upon  the  following  articles  which  are 
hereafter  produced  in  or  imported  into  the  United  States, 
or  which  on  the  day  after  the  passage  of  this  Act  are 
on  any  winery  premises  or  other  bonded  premises  or  in 
transit  thereto  or  at  any  customhouse,  there  shall  be 
levied,  collected,  and  paid  taxes  at  rates  as  follows,  when 
sold,  or  removed  for  consumption  or  sale: 

382.  On  each  bottle  or  other  container  of  champagne  or  sparkling  wine,  12 
cents  on  each  one-half  pint  or  fraction  thereof: 

383.  On  each  bottle  or  other  container  of  artificially  carbonated  wine,  6 cents 
on  each  one-half  pint  or  fraction  thereof; 

384.  On  each  bottle  or  other  container  of  liqueurs,  cordials,  or  similar  com- 
pounds, by  whatever  name  sold  or  offered  for  sale,  containing  sweet  wine  forti- 
fied with  grape  brandy,  6 cents  on  each  one-half  pint  or  fraction  thereof. 

385.  The  tax  imposed  by  this  section  shall,  in  the  case  of  any  article  upon 
which  a corresponding  internal-revenue  tax  is  now  imposed  by  law**,  be  in  lieu 
of  such  tax. 

Sec.  614.  That  upon  all  articles  specified  in  Section 
611  {par.  375)  or  613  {par.  381-385 ) upon  which  the  internal- 
revenue  tax  now  imposed  by  law  has  been  paid  and  which 
are  on  the  day  after  the  passage  of  this  Act  held  by  any 
person  and  intended  for  sale,  there  shall  be  levied,  col- 
lected, and  paid  a floor  tax  equal  to  the  difference  between  the  tax  imposed  by 
this  Act  and  the  tax  so  paid. 

Sec.  615.  That  upon  all  sweet  wines  held  for  sale  by 


381. 

Champagne  or 
sparkling  wine,  car- 
b o n a t e d wine, 
liqueurs,  cordials, 
etc. 


386. 

Floor  tax  equal  to 
difference  between 
the  two  taxes. 


Floor  tax  on  grape 
brandy  or  wine 


the  producer  thereof  upon  the  day  after  the  passage  of 
this  Act  there  shall  be  levied,  assessed,  collected,  and 
snirits  paid  a ^oor  tax  equivalent  to  30  cents  per  proof  gallon 

P ' upon  the  grape  brandy  or  wine  spirits  used  in  the 

fortification  of  such  wine. 

2gg  Sec.  616.  That  the  taxes  imposed  by  Section  611 


Tax  paid  by  stamp 


{par.  375-379)  or  613  {par.  381-385)  shall  be  paid  by  stamp 


on  removal  on  remova^  wines  from  the  customhouse,  winery, 

or  other  bonded  place  of  storage  for  consumption  or  sale, 
and  every  person  hereafter  producing,  or  having  in  his  possession  or  under 
his  control  when  this  title  takes  effect,  any  wines  subject  to  the  tax  imposed 
in  Section  611  {par.  375-379)  or  613  {par.  381-385)  shall  file  such  notice,  describing 
the  premises  on  which  such  wines  are  produced  or  stored;  shall  execute  a 
bond  in  such  form;  shall  make  such  inventories  under  oath;  and  shall,  prior 
to  sale  or  removal  for  consumption,  affix  to  each  cask  or  vessel  containing  such 
wine  such  marks,  labels,  or  stamps  as  the  Commissioner,  with  the  approval  of 
the  Secretary,  may  from  time  to  time  prescribe;  and  the  premises  described  in 
such  notice  shall,  for  the  purpose  of  this  Act,  be  regarded  as  bonded  premises. 
But  the  provisions  of  this  section,  except  as  to  payment  of  tax  and  the  affixing 
of  the  required  stamps  or  labels,  shall  not  apply  to  wines  held  by  retail  dealers, 


55 


*Rate  of  30c  per  proof  gallon. 

**Rates  one-half  those  specified  in  this  Act. 


390. 

Fortifying  sweet 
wines. 


as  defined  in  Section  3244  of  the  Revised  Statutes,  nor,  subject  to  regulations 
prescribed  by  the  Commissioner,  with  the  approval  of  the  Secretary,  shall  the 
tax  imposed  by  Section  611  {par.  375-378)  apply  to  wines  produced  for  the  family 
use  of  the  duly  registered  producer  thereof  and  not  sold  or  otherwise  removed 
from  the  place  of  manufacture  and  not  exceeding  in  any  case  two  hundred 
gallons  per  year. 

ogg  Sec.  617.  That  Sections  42,  43,  and  45  of  the  Act 

Amended  laws  entitled  “An  Act  to  reduce  the  revenue  and  equalize 

duties  on  imports,  and  for  other  purposes,”  approved 
October  1,  1899,  as  amended  by  Section  68  of  the  Act  entitled  “An  Act  to 
reduce  taxation,  to  provide  revenue  for  the  Government,  and  for  other  pur- 
poses,” approved  August  27,  1894,  are  further  amended  to  read  as  follows: 

“Sec.  42.  That  any  producer  of  pure  sweet  wines  may 
use  in  the  preparation  of  such  sweet  wines,  under  such 
regulations  and  after  the  filing  of  such  notices  and  bonds, 
together  with  the  keeping  of  such  records  and  the  rendi- 
tion of  such  reports  as  to  materials  and  products  as  the  Commissioner  of  the 
Internal  Revenue,  with  the  approval  of  the  Secretary  of  the  Treasury,  may  pre- 
scribe, wine  spirits  produced  by  any  duly  authorized  distiller,  and  the  Com- 
missioner of  Internal  Revenue,  in  determining  the  liability  of  any  distiller  of 
wine  spirits  to  assessment  under  Section  3309  of  the  Revised  Statutes,  is 
authorized  to  allow  such  distiller  credit  in  his  computations  for  the  wine  spirits 
withdrawn  to  be  used  in  fortifying  sweet  wines  under  this  Act. 
ggi  “Sec.  43.  That  the  wine  spirits  mentioned  in  Sec- 

Definitinn  nf  wine  tion  42  ^ar'  #°)  is  the  Product  resulting  from  the  dis- 
soirits  tillation  of  fermented  grape  juice,  to  which  water  may 

p * have  been  added  prior  to,  during,  or  after  fermentation, 

for  the  sole  purpose  of  facilitating  the  fermentation  and  economical  distillation 
thereof,  and  shall  be  held  to  include  the  product  from  grapes  or  their  residues 
commonly  known  as  grape  brandy,  and  shall  include  commercial  grape  brandy 
which  may  have  been  colored  with  burnt  sugar  or  caramel;  and  the  pure  sweet 
wine  which  may  be  fortified  with  wine  spirits  under  the  provisions  of  this  Act 
is  fermented  or  partially  fermented  grape  juice  only,  with  the  usual  cellar  treat- 
ment, and  shall  contain  no  other  substance  whatever  introduced  before,  at  the 
time  of,  or  after  fermentation,  except  as  herein  expressly  provided:  Provided, 
That  the  addition  of  pure  boiled  or  condensed  grape  must  or  pure  crystallized 
cane  or  beet  sugar,  or  pure  dextrose  sugar  containing,  respectively,  not  less 
than  95  per  centum  of  actual  sugar,  calculated  on  a dry  basis,  or  water,  or  any 
or  all  of  them  to  the  pure  grape  juice  before  fermentation,  or  to  the  fermented 
product  of  such  grape  juice,  or  to  both,  prior  to  the  fortification  herein  pro- 
vided for,  either  for  the  purpose  of  perfecting  sweet  wines  according  to  com- 
mercial standards  or  for  mechanical  purposes,  shall  not  be  excluded  by  the 
definition  of  pure  sweet  wine  aforesaid:  Provided,  however , That  the  cane  or 
beet  sugar,  or  pure  dextrose  sugar  added  for  sweetening  purposes  shall  not 
be  in  excess  of  11  per  centum  of  the  weight  of  the  wine  to  be  fortified: 
And  provided  further,  That  the  addition  of  water  herein  authorized  shall  be 
under  such  regulations  as  the  Commissioner  of  Internal  Revenue,  with  the 
approval  of  the  Secretary  of  the  Treasury,  may  from  time  to  time  prescribe: 
Provided,  however,  That  records  kept  in  accordance  with  such  regulations  as 
to  the  percentage  of  saccharine,  acid,  alcoholic,  and  added  water  content  of  the 
wine  offered  for  fortification  shall  be  open  to  inspection  by  any  official  of  the 
Department  of  Agriculture  thereto  duly  authorized  by  the  Secretary  of  Agricul- 
ture; but  in  no  case  shall  such  wines  to  which  water  has  been  added  be  eligible 
for  fortification  under  the  provisions  of  this  Act,  where  the  same,  after  fer- 
mentation and  before  fortification,  have  an  alcoholic  strength  of  less  than  5 per 
centum  of  their  volume. 

“Sec.  45.  That  under  such  regulations  and  official 
. , , . f supervision,  and  upon  the  execution  of  such  entries  and 

Withdrawal  ot  t^e  g{vjng  Gf  such  bonds,  bills  of  lading,  and  other  security 
wine  spirits.  as  tjie  Commissioner  of  Internal  Revenue,  with  the 

approval  of  the  Secretary  of  the  Treasury,  shall  prescribe,  any  producer  of 
pure  sweet  wines  as  defined  by  this  Act  may  withdraw  wine  spirits  from  any 
special  bonded  warehouse  in  original  packages  or  from  any  registered  dis- 
tillery in  any  quantity  not  less  than  eighty  wine  gallons,  and  may  use  so  much 
of  the  same  as  may  be  required  by  him  under  such  regulations,  and  after  the 
filing  of  such  notices  and  bonds  and  the  keeping  of  such  records  and  the 

56 


endition  of  such  reports  as  to  materials  and  products  and  the  disposition  of 
the  same  as  the  Commissioner  of  Internal  Revenue,  with  the  approval  of  the 
Secretary  of  the  Treasury,  shall  prescribe,  in  fortifying  the  pure  sweet  wines 
made  by  him,  and  for  no  other  purpose,  in  accordance  with  the  foregoing 
limitations  and  provisions;  and  the  Commissioner  of  Internal  Revenue,  with 
the  approval  of  the  Secretary  of  the  Treasury,  is  authorized  whenever  he  shall 
deem  it  to  be  necessary  for  the  prevention  of  violations  of  this  law  to  pre- 
scribe that  wine  spirits  withdrawn  under  this  section  shall  not  be  used  to 
fortify  wines  except  at  a certain  distance  prescribed  by  him  from  any  distillery, 
rectifying  house,  winery,  or  other  establishment  used  for  producing  or  storing 
distilled  spirits,  or  for  making  or  storing  wines  other  than  wines  which  are  so 
fortified,  and  that  in  the  building  in  which  such  fortification  of  wines  is  prac- 
ticed no  wines  or  spirits  other  than  those  permitted  by  this  regulation  shall 
be  stored  in  any  room  or  part  of  the  building  in  which  fortification  of  wines 
is  practiced.  The  use  of  wine  spirits  for  the  fortification  of  sweet  wines  under 
this  Act  shall  be  under  the  immediate  supervision  of  an  officer  of  internal 
revenue,  who  shall  make  returns  describing  the  kinds  and  quantities  of  wine 
so  fortified,  and  shall  affix  such  stamps  and  seals  to  the  packages  containing 
such  wines  as  may  be  prescribed  by  the  Commissioner  of  Internal  Revenue, 
with  the  approval  of  the  Secretary  of  the  Treasury;  and  the  Commissioner  of 
Internal  Revenue,  with  the  approval  of  the  Secretary  of  the  Treasury,  shall 
provide  by  regulations  the  time  within  which  wines  so  fortified  with  the  wine 
spirits  so  withdrawn  may  be  subject  to  inspection,  and  for  final  accounting  for 
the  use  of  such  wine  spirits  and  rewarehousing  or  for  payment  of  the  tax  on 
any  portion  of  such  wine  spirits  which  remain  not  used  in  fortifying  pure 
sweet  wines.” 


300  Sec.  618.  (a)  That  under  such  regulations  and  upon 

t?  ~i  «f  • the  execution  of  such  notices,  entries,  bonds,  and  other 
ov  o w s.  security  as  the  Commissioner,  with  the  approval  of  the 
Secretary,  may  prescribe,  domestic  wines  subject  to  the  tax  imposed  by  Sec- 
tion 611  (par.  375-378)  may  be  removed  from  the  winery  where  produced,  free 
of  tax,  for  storage  on  other  bonded  premises  or  from  such  premises  to  other 
bonded  premises  (but  not  more  than  one  such  additional  removal  shall  be 
allowed),  or  for  exportation . from  the  United  States  or  for  use  as  distilling 
material  at  any  regularly  registered  distillery:  Provided,  however.  That  the  dis- 
tiller using  any  such  wine  as  material  shall,  subject  to  the  provisions  of  Section 
3309  of  the  Revised  Statutes,  as  amended,  be  held  to  pay  the  tax  on  the  product 
of  such  wines  as  will  include  both  the  alcoholic  strength  therein  produced  by 
fermentation  and  that  obtained  from  the  brandy  or  wine  spirits  added  to  such 
wines  at  the  time  of  fortification. 

(b)  Under  regulations  prescribed  by  the  Commis- 


394. 


sioner  with  the  approval  of  the  Secretary,  it  shall  be 


non  beverae-e  nur  lawful  to  produce  grape  wines  on  bonded  winery  premises 
Doses  & P "by  the  usual  method,  and  to  transport  and  use  the  same, 

and  like  wines  heretofore  produced  and  now  stored  on 
bonded  winery  premises,  as  distilling  material  for  the  production  of  non- 
beverage spirits  in  the  production  of  nonalcoholic  wines,  containing  less  than 
^ of  1 per  centum  of*alcohol  by  volume,  in  any  fruit  brandy  or  industrial 
distillery:  Provided,  That  all  alcoholic  spirits  so  obtained  at  any  industrial  dis- 
tillery shall  be  denatured,  and  all  spirits  so  obtained  at  any  fruit  distillery  shall 
be  removed  and  used  only  for  non-beverage  purposes  or  for  denaturation. 

- Sec.  619.  That  the  collection  of  the  tax  on  imported 

rtf  Tav  st^  wines,  including  vermuth,  and  sparkling  wines,  in- 
* eluding  champagne,  and  on  imported  liqueurs,  cordials, 
and  similar  compounds,  may  be  made  within  the  discretion  of  the  Commis- 
sioner, with  the  approval  of  the  Secretary,  by  assessment  instead  of  by  stamps. 
3gg  Sec.  620.  That  whoever  evades  or  attempts  to  evade 

FWiaRiV*  any  tax  imPosed  by  Sections  611  to  615  (par.  37 5-387),  both 

fnr  virtlafirmc  r«f  inclusive,  or  any  requirement  of  Sections  610  to  621  (par. 

for  violations  of  law.  m_397^  both  incl^sive,  Gr  regulation . issued  pursuant 

thereto,  or  whoever,  otherwise  than  as  provided  in  such  sections,  recovers  or 
attempts  to  recover  any  spirits  from  domestic  or  imported  wine,  or  whoever 
rectifies,  mixes,  or  compounds  with  distilled  spirits  any  domestic  wines,  other 
than  in  the  manufacture  of  liqueurs,  cordials,  or  similar  compounds,  shall  on 
conviction,  be  punished  for  each  such  offense  by  a fine  of  not  exceeding  $5,000, 
or  imprisonment  for  not  more  than  five  years,  or  both,  and  in  addition  thereto 


57 


397. 

Commissioner  may 
require  use  of  meters, 
locks,  and  seals. 


by  a penalty  of  double  the  tax  evaded,  or  attempted  to  be  evaded,  to  be  assessed 
and  collected  in  the  same  manner  as  taxes  are  assessed  and  collected,  and 
all  wines,  spirits,  liqueurs,  cordials,  or  similar  compounds  as  to  which  such 
violation  occurs  shall  be  forfeited  to  the  United  States.  But  the  provisions 
of  this  section  and  the  provisions  of  Section  3244  of  the  Revised  Statutes, 
as  amended,  relating  to  rectification,  or  other  internal-revenue  laws  of  the 
United  States,  shall  not  be  held  to  apply  to  or  prohibit  the  mixing  or 
blending  of  wines  subject  to  tax  under  the  provisions  of  Sections  611  to  615 
{par.  375-387 ),  both  inclusive,  with  each  other  or  with  other  wines  for  the  sole 
purpose  of  perfecting  such  wines  according  to  commercial  standards:  Provided, 
that  nothing  herein  contained  shall  be  construed  as  prohibiting  the  use  of 
tax-paid  grain  or  other  ethyl  alcohol  in  the  fortification  of  sweet  wines  as 
defined  in  Section  610  {par.  374 ) of  this  Act  and  Section  43  {pa.r.  391)  of  the 
Act  entitled  “An  Act  to  reduce  the  revenue  and  equalize  duties  on  imports,  and 
for  other  purposes,”  approved  October  1,  1890,  as  amended  by  this  Act. 

Sec.  621.  That  the  Commissioner,  by  regulations  to 
be  approved  by  the  Secretary,  may  require  the  use  at 
each  fruit  distillery  of  such  spirit  meters,  and  such  locks 
and  seals  to  be  affixed  to  fermenters,  tanks,  or  other 
vessels  and  to  such  pipe  connections  as  may  in  his  judg- 
ment be  necessary  or  expedient,  and  is  hereby  authorized  to  assign  to  any 
such  distillery  and  to  each  winery  where  wines  are  to  be  fortified  such  number 
of  gaugers  or  storekeeper-gaugers  in  the  capacity  of  gaugers  as  may  be  neces- 
sary for  the  proper  supervision  of  the  manufacture  of  brandy  or  the  making 
or  fortifying  of  wines  subject  to  tax  imposed  by  this  section;  and  the  compensa- 
tion of  such  officers  shall  not  exceed  $5  per  diem  while  so  assigned,  together 
with  their  actual  and  necessary  traveling  expenses,  and  also  a reasonable  allow- 
ance for  their  board  bills,  to  be  fixed  by  the  Commissioner,  with  the  approval 
of  the  Secretary,  but  not  to  exceed  $2.50  per  diem  for  such  board  bills. 

2gg  Sec.  622.  That  the  Commissioner,  with  the  approval 

Allowance  for  loss.  of  the  Secretary,  is  hereby  authorized  to  make  such  allow- 
ances  for  unavoidable  loss  of  wines  while  on  storage  or 
during  cellar  treatment  as  in  his  judgment  may  be  just  and  proper. 

Sec.-  623.  That  the  second  paragraph  of  Section  3264 
of  the  Revised  Statutes,  as  amended  by  Section  5 of  the 
Act  of  March  1,  1879,  and  as  further  amended  by  the  Act 
of  June  22,  1910,  be  amended  so  as  to  read  as  follows: 

“In  all  surveys  forty-five  gallons  of  mash  or  beer 
brewed  or  fermented  from  grain  shall  represent  not  less 
than  one  bushel  of  grain,  and  seven  gallons  of  mash  or 
beer  brewed  or  fermented  from  molasses  shall  represent 
not  less  than  one  gallon  of  molasses,  except  in  distilleries  operated  on  the  sour- 
mash  principle,  in  which  distilleries  sixty  gallons  of  beer  brewed  or  fermented 
from  grain  shall  represent  not  less  than  one  bushel  of  grain,  and  except  that 
in  distilleries  where  the  filtration-aeration  process  is  used,  with  the  approval 
of  the  Commissioner  of  Internal  Revenue;  that  is,  where  the  mash  after  it 
leaves  the  mash  tub  is  passed  through  a filtering  machine  before  it  is  run 
into  the  fermenting  tub,  and  only  the  filtered  liquor  passes  into  the  fermenting 
tub,  there  shall  hereafter  be  no  limitation  upon  the  number  of  gallons  of  water 
which  may  be  used  in  the  process  of  mashing  or  filtration  for  fermentation; 
but  the  Commissioner  of  Internal  Revenue,  with  the  approval  of  the  Secretary 
of  the  Treasury,  in  order  to  protect  the  revenue,  shall  be  authorized  to  pre- 
scribe by  regulation,  to  be  made  by  him,  such  character  of  survey  as  he  may 
find  suitable  for  distilleries  using  such  filtration-aeration  process.  The  pro- 
vision hereof  relating  to  filtration-aeration  process  shall  apply  only  to  sweet- 
mash  distilleries.” 

Sec.  624.  That  under  such  regulations  as  the  Com- 
missioner, with  the  approval  of  the  Secretary,  may  pre- 
scribe, alcohol  or  other  distilled  spirits  of  a proof  strength 
of  not  less  than  one  hundred  and  eighty  degrees  intended 
for  export  free  of  tax  may  be  drawn  from  receiving  cisterns 
at  any  distillery,  or  from  storage  tanks  in  any  distillery  warehouse,  for  transfer 
to  tanks  or  tank  cars  for  export  from  the  United  States,  and  all  provisions 
of  existing  law  relating  to  the  exportation  of  distilled  spirits  not  inconsistent 
herewith  shall  apply  to  spirits  removed  for  export  under  the  provisions  of 
this  Act. 


399. 

Portion  Sec.  3264 
R.  S.  amended. 

400. 

Basic  grain  and 
molasses  in  distilling. 


401. 

Alcohol  or  other 
distilled  spirits  in- 
tended for  export. 


58 


402.  Sec.  625.  That  Section  3255  of  the  Revised  Statutes 

Sec.  3255  R.  S.  as  amended  by  the  Act  of  June  3,  1896,  and  as  further 
amended.  amended  by  the  Act  of  March  2,  1911,  be  further  amended 

so  as  to  read  as  follows: 


403. 

Commissioner  may 


sively  of  fruit  from 
provisions  relating  to 
mfr.  of  spirits,  except 
as  to  tax. 


“Sec.  3255.  The  Commissioner  of  Internal  Revenue, 
with  the  approval  of  the  Secretary  of  the  Treasury,  may 
exemot  distillers  of  exemPt  distillers  of  brandy  made  exclusively  from  apples, 
brandy  made  exclu-  Peac.hes-  grapes,  pears,  pineapples,  oranges,  apricots, 
ci^Ur  fruit  frnn,  berries,  plums,  pawpaws,  persimmons,  prunes,  figs,  or 
cherries  from  any  provision  of  this  title  relating  to  the 
manufacture  of  spirits,  except  as  to  the  tax  thereon,  when 
in  his  judgment  it  may  seem  expedient  to  do  so:  Provided, 
that  where,  in  the  manufacture  of  wine,  artificial  sweet- 
ening has  been  used  the  wine  or  the  fruit  pomace  residuum  may  be  used  in 
the  distillation  of  brandy,  and  such  use  shall  not  prevent  the  Commissioner  of 
Internal  Revenue,  with  the  approval  of  the  Secretary  of  the  Treasury,  from 
exempting  such  distiller  from  any  provision  of  this  title  relating  to  the  manu- 
facture of  spirits,  except  as  to  the  tax  thereon,  when  in  his  judgment  it  may 
seem  expedient  to  do  so:  And  provided  further,  That  the  distillers  mentioned 
in  this  section  may  add  to  not  less  than  five  hundred  gallons  (or  ten  barrels) 
of  grape  cheese  not  more  than  five  hundred  gallons  of  a sugar  solution  made 
from  cane,  beet,  starch,  or  corn  sugar,  95  per  centum  pure,  such  solution  to 
have  a saccharine  strength  of  not  to  exceed  10  per  centum,  and  may  ferment 
the  resultant  mixture  on  a winery  or  distillery  premises,  and  such  fermented 
product  shall  be  regarded  as  distilling  material.” 

Sec.  626.  That  distilled  spirits  known  commercially 
^ ui.  p .as  gin  of  not  less  than  80  per  centum  proof  may  at  any 

uin  or  expor  . time  within  eight  years  after  entry  in  bond  at  any  dis- 

tillery be  bottled  in  bond  at  such  distillery  for  export  without  the  payment  of 
tax,  under  such  rules  and  regulations  as  the  Commissioner,  with  the  approval 
of  the  Secretary,  may  prescribe. 


405. 

Sec.  3354 
amended. 


R.  S. 


406. 

Withdrawal  of  fer- 


Sec.  627.  That  Section  3354  of  the  Revised  Statutes 
as  amended  by  the  Act  approved  June  18,  1890,  be,  and 
is  hereby,  amended  to  read  as  follows: 

“Sec.  3354.  Every  person  who  withdraws  any  fer- 
mented liquor  from  any  hogshead,  barrel,  keg,  or  other 


t j 1 • f " vessel  upon  which  the  proper  stamp  has  not  been  affixed 

bottline:  **  for  t^ie  PurP°se  °f  bottling  the  same,  or  who  carries  on 

or  attempts  to  carry  on  the  business  of  bottling  fermented 
liquor  in  any  brewery  or  other  place  in  which  fermented  liquor  is  made,  or 
upon  any  premises  having  communication  with  such  brewery,  or  any  ware- 
house, shall  be  liable  to  a fine  of  $500,  and  the  property  used  in  such  bottling 
or  business  shall  be  liable  to  forfeiture:  Provided,  however.  That  this  section 
shall  not  be  construed  to  prevent  the  withdrawal  and  transfer  of  unfermented, 
partially  fermented,  or  fermented  liquors  from  any  of  the  vats  in  any  brewery 
by  way  of  a pipe  line  or  other  conduit  to  another  building  or  place  for  the 
sole  purpose  of  bottling  the  same,  such  pipe  line  or  conduit  to  be  constructed 
and  operated  in  such  manner  and  with  such  cisterns,  vats,  tanks,  valves,  cocks, 
faucets,  and  gauges,  or  other  utensils  or  apparatus,  either  on  the  premises  of 
the  brewery  or  the  bottling  house,  and  with  such  changes  of  or  additions  thereto, 
and  such  locks,  seals,  or  other  fastenings,  and  under  such  rules  and  regulations 
as  shall  be  from  time  to  time  prescribed  by  the  Commissioner  of  Internal 
Revenue,  subject  to  the  approval  of  the  Secretary  of  the  Treasury,  and  all  locks 
and  seals  prescribed  shall  be  provided  by  the  Commissioner  of  Internal  Revenue 
at  the  expense  of  the  United  States:  Provided  further,  That  the  tax  imposed  in 
Section  3339  of  the  Revised  Statutes  shall  be  paid  on  all  fermented  liquor 
removed  from  a brewery  to  a bottling  house  by  means  of  a pipe  or  conduit, 
at  the  time  of  such  removal,  by  the  cancellation  and  defacement,  by  the  col- 
lector of  the  district  or  his  deputy,  in  the  presence  of  the  brewer,  of  the  num- 
ber of  stamps  denoting  the  tax  on  the  fermented  liquor  thus  removed.  The 
stamps  thus  canceled  and  defaced  shall  be  disposed  of  and  accounted  for  in 
the  manner,  directed  by  the  Commissioner  of  Internal  Revenue,  with  the  approval 
of  the  Secretary  of  the  Treasury.  And  any  violation  of  the  rules  and  regula- 
tions hereafter  prescribed  by  the  Commissioner  of  Internal  Revenue,  with  the 
approval  of  the  Secretary  of  the  Treasury,  in  pursuance  of  these  provisions, 
shall  be  subject  to  the  penalties  above  provided  by  this  section.  Every  owner, 

59 


agent,  or  superintendent  of  any  brewery  or  bottling  house  who  removes,  or 
connives  at  the  removal  of,  any  fermented  liquor  through  a pipe  line  or  con- 
duit, without  payment  of  the  tax  thereon,  or  who  attempts  in  any  manner  to 
defraud  the  revenue  as  above,  shall  forfeit  all  the  liquors  made  by  and  for  him, 
and  all  the  vessels,  utensils,  and  apparatus  used  in  making  the  same.” 


407. 

Taxes  on 


Sec.  628.  That  there  shall  be  levied,  assessed,  collected, 
and  paid  in  lieu  of  the  taxes  imposed  by  Sections  313  and  315 
of  the  Revenue  Act  of  1917* — 


(a)  Upon  all  beverages  derived  wholly  or  in  part  from 
cereals  or  substitutes  therefor,  and  containing  less  than  one- 
half  of  one  per  centum  of  alcohol,  sold  by  the  manufacturer, 
producer,  or  importer,  in  bottles  or  other  closed  containers,  a 
tax  equivalent  to  15  per  centum  of  the  price  for  which  so  sold ; 
and  upon  all  unfermented  grape  juice,  ginger  ale,  root  beer,  sarsaparilla,  pop,  artificial 
mineral  waters  (carbonated  or  not  carbonted),  other  carbonated  waters  or  beverages, 
and  other  soft  drinks,  sold  by  the  manufacturer,  producer,  or  importer,  in  bottles  or 
other  closed  containers,  a tax  equivalent  to  10  per  centum  of  the  price  for  which  so 
sold ; and 


408. 

Beverages  derived 
from  cereals  or  sub- 
stitutes. 


(b)  Upon  all  natural  mineral  waters  or  table  waters,  sold 
by  the  producer,  bottler,  or  importer  thereof,  in  bottles  or 
other  closed  containers,  at  over  10  cents  per  gallon,  a tax 
of  2 cents  per  gallon. 

Sec.  629.  That  each  manufacturer,  producer,  bottler,  or 
importer  of  any  of  the  articles  enumerated  in  Section  628  (par. 
408-409)  shall  make  monthly  returns  under  oath  in  duplicate 
and  pay  the  taxes  imposed  in  respect  to  such  articles  by  such  section  to  the  collector 
for  the  district  in  which  is  located  the  principal  place  of  business,  containing  such 
information  necessary  for  the  assessment  of  the  tax,  and  at  such  times  and  in  such 
manner  as  the  Commissioner,  with  the  approval  of  the  Secretary,  may  by  regulation 
prescribe. 


409. 

Natural  mineral  or 
table  waters. 

410. 

Monthly  returns. 


The  tax  shall,  without  assessment  by  the  Commissioner 
a „ a nav  or  notice  from  the  collector,  be  due  and  payable  to  the  col- 

ment  y P y-  lector  at  the  time  so  fixed  for  filing  the  return.  If  the  tax 

is  not  paid  when  due,  there  shall  be  added  as  part  of  the  tax 
a penalty  of  5 per  centum,  together  with  interest  at  the  rate  of  1 per  centum  for  each 
full  month,  from  the  time  when  the  tax  became  due. 


Sec.  630.  That  on  and  after  May  1,  1919,  there  shall  be 
levied,  assessed,  collected,  and  paid  a tax  of  1 cent  for  each 
10  cents  or  fraction  thereof  of  the  amount  paid  to  any  person 
conducting  a soda  fountain,  ice-cream  parlor,  or  other  similar 
place  of  business,  for  drinks  commonly  known  as  soft  drinks, 
compounded  or  mixed  at  such  place  of  business,  or  for  ice 
cream,  ice  cream  sodas,  sundaes,  or  other  similar  articles  of 
food  or  drink,  when  any  of  the  above  are  sold  on  or  after  such  date  for  consumption 
in  or  in  proximity  to  such  place  of  business.  Such  tax  shall  be  paid  by  the  purchaser 
to  the  vendor  at  the  time  of  the  sale  and  shall  be  collected,  returned,  and  paid  to  the 
United  States  by  such  vendor  in  the  same  manner  as  provided  in  Section  502  (par. 
336-340). 


412. 

Effective  May  1, 
1919,  tax  on  soft 
drinks,  ice  cream,  etc., 
consumed  at  place  of 
business. 


TITLE  VII.— TAX  ON  CIGARS,  TOBACCO,  AND  MANUFACTURES 

THEREOF 


413.  Sec.  700.  (a)  That  upon  cigars  and  cigarettes  manufactured  in  or  imported 

into  the  United  States,  and  hereafter  sold  by  the  manufacturer  or  importer,  or  removed 
for  consumption  or  sale,  there  shall  be  levied,  collected,  and  paid  under  the  provisions 


*Tax  upon  all  prepared  sirups  or  extracts  used  in  manufacture  of  soft  drinks  if  sold  for  not 
more  than  $1.30  per  gallon,  5c;  between  $1.30  and  $2,  8c;  between  $2  and  $3,  10c;  between  $3  and 
$4,  15c,  and  if  sold  for  more  than  $4,  20c. 

Unfermented  grape  juice,  soft  drinks  or  artificial  mineral  waters  (not  carbonated)  and  fermented 
liquors  containing  less  than  J4  % alcohol,  sold  by  manufacturer,  producer  or  importer  in  bottles  or 
closed  containers,  lc.  Ginger  ale,  root  beer,  sarsaparilla,  pop  and  all  other  carbonated  waters  or 
beverages  manufactured  and  sold  by  manufacturer,  producer  or  importer  of  the  carbonic-acid  gas 
used  in  carbonating  same,  lc  per  gallon.  Natural  mineral  waters  or  table  waters  sold  by  producer, 
bottler  or  importer  in  bottles  or  other  closed  containers  at  over  10c  per  gallon,  tax  of  lc. 

Carbonic-acid  gas  in  drums  or  other  containers  (intended  for  use  in  manufacture  or  production 
of  carbonated  water  or  other  drinks)  sold  by  manufacturer,  producer  or  importer  thereof,  tax  of  5c 
per  pound. 


60 


414. 

Tax  on  cigars. 


418. 

Determination 

price. 


of 


419. 

Designating 
paid  label. 


tax 


of  existing  law,  in  lieu  of  the  internal-revenue  taxes  now  imposed*  thereon  by  law, 
the  following  taxes,  to  be  paid  by  the  manufacturer  or  importer  thereof — 

On  cigars  of  all  descriptions  made  of  tobacco,  or  any  sub- 
stitute therefor,  and  weighing  not  more  than  three  pounds 
per  thousand,  $1.50  per  thousand; 

415.  On  cigars  made  of  tobacco,  or  any  substitute  therefor,  and  weighing  more 
than  three  pounds  per  thousand,  if  manufactured  or  imported  to  retail  at  not  more 
than  5 cents  each,  $4  per  thousand; 

If  manufactured  or  imported  to  retail  at  more  than  5- cents  each  and  not  more 
than  8 cents  each,  $6  per  thousand ; 

If  manufactured  or  imported  to  retail  at  more  than  8 cents  each  and  not  more 
than  15  cents  each,  $9  per  thousand; 

If  manufactured  or  imported  to  retail  at  more  than  15  cents  each  and  not  more 
than  20  cents  each,  $12  per  thousand; 

If  manufactured  or  imported  to  retail  at  more  than  20  cents  each,  $15  per 
thousand ; 

On  cigarettes  made  of  tobacco,  or  any  substitute  therefor, 

. ..  and  weighing  not  more  than  three  pounds  per  thousand,  $3 

Tax  on  cigarettes.  per  thou°san<f. 

417.  Weighing  more  than  three  pounds  per  thousand,  $7.20  per  thousand. 

(b)  Whenever  in  this  section  reference  is  made  to  cigars 
manufactured  or  imported  to  retail  at  not  over  a certain  price 
each,  then  in  determining  the  tax  to  be  paid  regard  shall  be 
had  to  the  ordinary  retail  price  of  a single  cigar. 

(c)  The  Commissioner  may,  by  regulation,  require  the 
manufacturer  or  importer  to  affix  to  each  box,  package,  or 
container  a conspicuous  label  indicating  the  clause  of  this 
section  under  which  the  cigars  therein  contained  have  been 

tax-paid,  which  must  correspond  with  the  tax-paid  stamp  on  such  box  or  container. 

(d)  Every  manufacturer  of  cigarettes  (including  small 
cigars  weighing  not  more  than  three  pounds  per  thousand) 
shall  put  up  all  the  cigarettes  and  such  small  cigars  that  he 
manufactures  or  has  manufactured  for  him,  and  sells  or  re- 
moves for  consumption  or  sale,  in  packages  or  parcels  contain- 
ing five,  eight,  ten,  twelve,  fifteen,  sixteen,  twenty,  twenty- 
four,  forty,  fifty,  eighty,  or  one  hundred  cigarettes  each,  and 

shall  securely  affix  to  each  of  such  packages  or  parcels  a suitable  stamp  denoting  the 
tax  thereon  and  shall  properly  cancel  the  same  prior  to  such  sale  or  removal  for  con- 
sumption or  sale  under  such  regulations  as  the  Commissioner,  with  the  approval  of 
the  Secretary,  shall  prescribe ; and  all  cigarettes  imported  from  a foreign  country 
shall  be  packed,  stamped,  and  the  stamps  canceled  in  a like  manner,  in  addition  to 
the  import  stamp  indicating  inspection  of  the  customhouse  before  they  are  withdrawn 
therefrom. 

.£i  Sec.  701.  (a)  That  upon  all  tobacco  and  snuff  manufac- 

T harm  a«H  cnnff  tured  in  or  imported  into  the  United  States,  and  hereafter 
° sold  by  the  manufacturer  or  importer,  or  removed  for  con- 

sumption or  sale,  there  shall  be  levied,  collected,  and  paid,  in 
lieu  of  the  internal-revenue  taxes  now  imposed  thereon  by  law**,  a tax  of  18  cents 
per  pound,  to  be  paid  by  the  manufacturer  or  importer  thereof. 

Sec.  3362  R.  S.  (b)  Section  3362  of  the  Revised  Statutes,  as  amended, 
amended.  is  hereby  amended  to  read  as  follows : 

422  “Sec.  3362.  All  manufactured  tobacco  shall  be  put  up 

Packages  manu-  anc^  PreParec^  by  the  manufacturer  for  sale,  or  removal  for 
factured  tobacco  " sa^e  or  consumPti°n>  in  packages  of  the  following  description 
1 co‘  and  in  no  other  manner : 

423.  “All  smoking  tobacco,  snuff,  fine-cut  chewing  tobacco,  all  cut  and  granulated 
tobacco,  all  shorts,  the  refuse  of  fine-cut  chewing,  which  has  passed  through  a riddle 
of  thirty-six  meshes  to  the  square  inch,  and  all  refuse  scraps,  clippings,  cuttings,  and 

*Cigars  weighing  not  more  than  3 lbs.  per  1,000  tax  of  $1.00  per  M,  weighing  more  than  3 
lbs.  per  M,  retailed  at  less  than  4c  each  $3;  retailing  4c  to  7c,  $4;  7c — 15c,  $6;  15c — 20c,  $8 
and  more  than  20c  each  $10;  and  cigarettes  weighing  not  more  than  3 lbs.  per  1,000  $2.05,  and  if 
weighing  more  than  3 lbs.  per  1,000,  $4.80. 

**Tax  at  rate  of  13c  per  pound. 


420. 

Number  of  cigar- 
ettes and  small  cigars 
put  in  packages, 
stamps  affixed  and 
cancelled. 


61 


sweepings  of  tobacco,  and  all  other  kinds  of  tobacco  not  otherwise  provided  for,  in 
packages  containing  one-eighth  of  an  ounce,  three-eighths  of  an  ounce,  and  further 
packages  with  a difference  between  each  package  and  the  one  next  smaller  of  one- 
eighth  of  an  ounce  up  to  and  including  two  ounces,  and  further  packages  with  a 
difference  between  each  package  and  the  one  next  smaller  of  one-fourth  of  an  ounce 
up  to  and  including  four  ounces,  and  packages  of  five  ounces,  six  ounces,  seven  ounces, 
eight  ounces,  ten  ounces,  twelve  ounces,  fourteen  ounces,  and  sixteen  ounces : Provided, 
that  snuff  may,  at  the  option  of  the  manufacturer,  be  put  up  in  bladders  and  in  jars 
containing  not  exceeding  twenty  pounds. 


“All  cavendish,  plug,  and  twist  tobacco,  in  wooden  pack- 
ages not  exceeding  two  hundred  pounds  net  weight. 

“And  every  such  wooden  package  shall  have  printed  or 
marked  thereon  the  manufacturer’s  name  and  place  of  manu- 
facture, the  registered  number  of  the  manufactory,  and  the 
gross  weight,  the  tare,  and  the  net  weight  of  the  tobacco  in 
each  package : Provided,  that  these  limitations  and  descriptions  of  packages  shall 
not  apply  to  tobacco  and  snuff  transported  in  bond  for  exportation  and  actually  ex- 
ported: And  provided  further,  that  perique  tobacco,  snuff  flour,  fine-cut  shorts,  the 
refuse  of  fine-cut  chewing  tobacco,  refuse  scraps,  clippings,  cuttings,  and  sweepings 
of  tobacco,  may  be  sold  in  bulk  as  material,  and  without  the  payment  of  tax,  by  one 
manufacturer  directly  to  another  manufacturer,  or  for  export,  under  such  restrictions, 
rules,  and  regulations  as  the  Commissioner  of  Internal  Revenue  may  prescribe:  And 
provided  further,  that  wood,  metal,  paper,  or  other  materials  may  be  used  separately 
or  in  combination  for  packing  tobacco,  snuff,  and  cigars,  under  such  regulations  as 
the  Commissioner  of  Internal  Revenue  may  establish.” 


424. 

Tobacco  in  wood. 

425. 

Markings  on  wood- 
en packages. 


426. 

Floor  tax. 


Sec.  702.  That  upon  all  the  articles  enumerated  in  Sec- 
tion 700,  (par.  413-417),  or  701  (par.  421 ),  which  were  manu- 
factured or  imported,  and  removed  from  factory  or  custom- 
house on  or  prior  to  the  date  of  the  passage  of  this  Act,  and  upon  which  the  tax 
imposed  by  existing  law  has  been  paid,  and  which  are,  on  the  day  after  the  passage 
of  this  Act,  held  by  any  person  and  intended  for  sale,  there  shall  be  levied,  assessed, 
collected,  and  paid  a floor  tax  equal  to  the  difference  between  (a)  the  tax  imposed  by 
this  Act  upon  such  articles  according  to  the  class  in  which  they  are  placed  by  this 
title,  and  (b)  the  tax  imposed  upon  such  articles  by  existing  law  other  than  Section 
403  of  the  Revenue  Act  of  1917. 


Sec.  703.  That  there  shall  be  levied,  collected,  and  paid, 
in  lieu  of  the  taxes  imposed  by  Section  404  of  the  Revenue 
Act  of  1917*,  upon  cigarette  paper  made  up  into  packages, 
books,  sets,  or  tubes,  made  up  in  or  imported  into  the  United 
States  and  hereafter  sold  by  the  manufacturer  or  importer 
to  any  person  (other  than  to  a manufacturer  of  cigarettes 
for  use  by  him  in  the  manufacture  of  cigarettes)  the  follow- 
ing taxes,  to  be  paid  by  the  manufacturer  or  importer:  On  each  package,  book,  or 
set,  containing  more  than  twenty-five  but  not  more  than  fifty  papers,  J4  cent ; con- 
taining more  than  fifty  but  not  more  than  one  hundred  papers,  1 cent;  containing 
more  than  one  hundred  papers,  54  cent  for  each  fifty  papers  or  fractional  part  thereof ; 
and  upon  tubes,  1 cent  for  each  fifty  tubes  or  fractional  part  thereof. 


427. 

Tax  on  cigarette 
paper  made  up  into 
packages,  books,  sets 
or  tubes. 


428. 

Bond  of  manufac- 
turers purchasing 
cigarette  tubes. 


Every  manufacturer  of  cigarettes  purchasing  any  cigarette 
paper  made  up  into  tubes  (a)  shall  give  bond  in  an  amount 
and  with  sureties  satisfactory  to  the  Commissioner  that  he 
will  use  such  tubes  in  the  manufacture  of  cigarettes  or  pay 
thereon  a tax  equivalent  to  the  tax  imposed  by  this  section, 
and  (b)  shall  keep  such  records  and  render  under  oath  such  returns  as  the  Commis- 
sioner finds  necessary  to  show  the  disposition  of  all  tubes  purchased  or  imported  by 
such  manufacturer  of  cigarettes. 

42g  Sec.  704.  That  Section  35  of  the  Act  entitled  “An  Act 

c ..  11  to  provide  revenue,  equalize  duties  and  encourage  the  in- 

^ ’ dustries  of  the  United  States,  and  for  other  purposes,”  ap- 

proved August  5,  1909,  be,  and  is  hereby,  repealed,  to  take  effect  April  1,  1919. 


Sec.  3360 
amended. 


R.  S. 


That  Section  3360  of  the  Revised  Statutes  be,  and  is 
hereby,  amended  to  read  as  follows : 


*Tax  same  as  this  Act  but  cigarette  papers  taxed  at  rate  of  lc  and  tubes  2c  for  each  100  or 
fraction. 


62 


430. 

Statement  filed  by 
dealers  in  leaf  to- 
bacco. 


431. 

Bond  with  surety. 


“Sec.  3360.  (a)  Every  dealer  in  leaf  tobacco  shall  file 

with  the  collector  of  the  district  in  which  his  business  is 
carried  on,  a statement  in  duplicate,  subscribed  under  oath, 
setting  forth  the  place,  and,  if  in  a city,  the  street  and  number 
of  the  street,  where  his  business  is  to  be  carried  on,  and  the 
exact  location  of  each  place  where  leaf  tobacco  is  held  by  him  on  storage,  and,  when- 
ever he  adds  to  or  discontinues  any  of  his  leaf  tobacco  storage  places,  he  shall  give 
immediate  notice  to  the  collector  of  the  district  in  which  he  is  registered. 

“Every  such  dealer  shall  give  a bond  with  surety,  satis- 
factory to,  and  to  be  approved  by,  the  collector  of  the  district, 
in  such  penal  sum  as  the  collector  may  require,  not  less  than 
$500;  and  a new  bond  may  be  required  in  the  discretion  of  the  collector  or  under 

instructions  of  the  Commissioner. 

432  “Every  such  dealer  shall  be  assigned  a number  by  the  col- 

Certificate  and  ^ector  t^ie  district,  which  number  shall  appear  in  every 
number  inventory,  invoice  and  report  rendered  by  the  dealer,  who 

shall  also  obtain  certificates  from  the  collector  of  the  district 
setting  forth  the  place  where  his  business  is  carried  on  and  the  places  designated  by 

the  dealer  as  the  places  of  storage  of  his  tobacco,  which  certificates  shall  be  posted 
conspicuously  within  the  dealer’s  registered  place  of  business,  and  within  each  desig- 
nated place  of  storage. 

“(b)  Every  dealer  in  leaf  tobacco  shall  make  and  deliver 
^ y . to  the  collector  of  the  district  a true  inventory  of  the  quantity 

inventories.  Qf  tjje  different  kinds  of  tobacco  held  or  owned,  and  where 

stored  by  him,  on  the  first  day  of  January  of  each  year,  or  at  the  time  of  commencing 
and  at  the  time  of  concluding  business,  if  before  or  after  the  first  day  of  January, 
such  inventory  to  be  made  under  oath  and  rendered  in  such  form  as  may  be  prescribed 
by  the  Commissioner. 

434  “Every  dealer  in  leaf  tobacco  shall  render  such  invoices 

^ , and  keep  such  records  as  shall  be  prescribed  by  the  Commis- 

icecoras.  sioner,  and  shall  enter  therein,  day  by  day,  and  upon  the  same 

day  on  which  the  circumstance,  thing  or  act  to  be  recorded  is  done  or  occurs,  an 
accurate  account  of  the  number  of  hogsheads,  tierces,  cases  and  bales,  and  quantity 
of  leaf  tobacco  contained  therein,  purchased  or  received  by  him,  on  assignment,  con- 
signment, for  storage,  by  transfer  or  otherwise,  and  of  whom  purchased  or  received, 
and  the  number  of  hogsheads,  tierces,  cases  and  bales,  and  the  quantity  of  leaf 
tobacco  contained  therein,  sold  by  him,  with  the  name  and  residence  in  each  instance 
of  the  person  to  whom  sold,  and  if  shipped,  to  whom  shipped,  and  to  what  district; 
such  records  shall  be  kept  at  his  place  of  business  at  all  times  and  preserved  for  a 
period  of  two  years,  and  the  same  shall  be  open  at  all  hours  for  the  inspection  of  any 
internal-revenue  officer  or  agent. 

43-  “Every  dealer  in  leaf  tobacco  on  or  before  the  tenth  day 

^ Monthlv  renort  °*  eac^  mont^»  furnish  to  the  collector  of  the  district 

0 1 y p a true  and  complete  report  of  all  purchases,  receipts,  sales 

and  shipments  of  leaf  tobacco  made  by  him  during  the  month  next  preceding,  which 
report  shall  be  verified  and  rendered  in  such  form  as  the  Commissioner,  with  the 
approval  of  the  Secretary,  shall  prescribe. 

436  “(c)  Sales  or  shipments  of  leaf  tobacco  by  a dealer  in 

<s*  1 a r cViinm^ntc  leaf  tokacco  shall  be  in  quantities  of  not  less  than  a hogshead, 

s ° " ' tierce,  case,  or  bale,  except  loose  leaf  tobacco  comprising  the 

breaks  on  warehouse  floors,  and  except  to  a duly  registered  manufacturer  of  cigars 
for  use  in  his  own  manufactory  exclusively. 

437.  “Dealers  in  leaf  tobacco  shall  make  shipments  of  leaf  tobacco  only  to  other 
dealers  in  leaf  tobacco,  to  registered  manufacturers  of  tobacco,  snuff,  cigars  or 
cigarettes,  or  for  export. 

43o  “(d)  Upon  all  leaf  tobacco  sold,  removed  or  shipped  by 

Tav  f n r any  dealer  in  leaf  tobacco  in  violation  of  the  provisions  of 

violation  P subdivision  (c)  (par.  436-437 ),  or  in  respect  to  which  no 

report  has  been  made  by  such  dealer  in  accordance  with  the 
provisions  of  subdivision  (b)  (par.  433-435 ),  there  shall  be  levied,  assessed,  collected 
and  paid  a tax  equal  to  the  tax  then  in  force  upon  manufactured  tobacco,  such  tax 
to  be  assessed  and  collected  in  the  same  manner  as  the  tax  on  manufactured  tobacco. 


439. 

Penalties. 


“(e)  Every  dealer  in  leaf  tobacco 


63 


440.  “(1)  who  neglects  or  refuses  to  furnish  the  statement,  to  give  bond,  to  keep 
books,  to  file  inventory  or  to  render  the  invoices,  returns  or  reports  required  by  the 
Commissioner,  or  to  notify  the  collector  of  -the  district  of  additions  to  his  places  of 
storage;  or 

441.  “(2)  who  ships  or  delivers  leaf  tobacco,  except  as  herein  provided;  or 

442.  “(3)  who  fraudulently  omits  to  account  for  tobacco  purchased,  received,  sold, 
or  shipped ; shall  be  fined  not  less  than  $100  or  more  than  $500,  or  imprisoned  not 
more  than  one  year,  or  both. 


443. 

Farmer  or  grower. 


“(f)  For  the  purposes  of  this  section  a farmer  or  grower 
of  tobacco  shall  not  be  regarded  as  a dealer  in  leaf  tobacco  in 
respect  to  the  leaf  tobacco  produced  by  him.” 


TITLE  VIII.— TAX  ON  ADMISSIONS  AND  DUES 


444.  Sec.  800.  (a)  That  from  and  after  April  1,  1919,  there 

Effective  April  1,  shall  be  levied,  assessed,  collected,  and  paid,  in  lieu  of  the 
1919.  taxes  imposed  by  Section  700  of  the  Revenue  Act  of  1917* — 

445  (1)  A tax  °f  1 cent  for  each  10  cents  or  fraction  thereof 

a/imi'ecM’orie  °f  the  amount  paid  for  admission  to  any  place  on  or  after 

A dX  Ull  dUlIlloolUUo*  ij.  • i,#  i i i 

such  date,  including  admission  by  season  ticket  or  subscription, 
to  be  paid  by  the  person  paying  for  such  admission; 

440  (2)  In  the  case  of  persons  (except  bona  fide  employees, 

A o/imiccJone  or-  municipal  officers  on  official  business,  persons  in  the  military 
reduced  rates  or  nava^  f°rces  °f  the  United  States  when  in  uniform,  and 

children  under  twelve  years  of  age)  admitted  free  or  at 
reduced  rates  to  any  place  at  a time  when  and  under  circumstances  under  which  an 
admission  charge  is  made  to  other  persons,  a tax  of  1 cent  for  each  10  cents  or 
fraction  thereof  of  the  price  so  charged  to  such  other  persons  for  the  same  or 
similar  accommodations,  to  be  paid  by  the  person  so  admitted ; 

(3)  Upon  tickets  or  cards  of  admission  to  theaters, 
operas,  and  other  places  of  amusement,  sold  at  news  stands, 
hotels,  and  places  other  than  the  ticket  offices  of  such  theaters, 
operas,  or  other  places  of  amusement,  at  not  to  exceed  50 
cents  in  excess  of  the  sum  of  the  established  price  therefor 
at  such  ticket  offices  plus  the  amount  of  any  tax  imposed 
under  paragraph  (1),  (par.  445),  a tax  equivalent  to  5 per 
centum  of  the  amount  of  such  excess;  and  if  sold  for  more  than  50  cents  in  excess 
of  the  sum  of  such  established  price  plus  the  amount  of  any  tax  imposed  under  para- 
graph (1)  (par.  445),  a tax  equivalent  to  50  per  centum  of  the  whole  amount  of  such 
excess,  such  taxes  to  be  returned  and  paid,  in  the  manner  provided  in  Section  903 
(par.  482-483)  by  person  selling  such  tickets; 

AAQ  (4)  A tax  equivalent  to  50  per  centum  of  the  amount 


447. 

Tax  on  tickets  sold 
at  other  than  places 
of  amusement  in  ex- 
cess o f established 
price. 


for  which  the  proprietors,  managers  or  employees  of  any 
. opera  house,  theater,  or  other  place  of  amusement  sell  or 

proprietors,  manag-  ^gpo^  0f  tickets  or  cards  of  admission  in  excess  of  the 

ers,  etc.  regular  or  established  price  or  charge  therefor,  such  tax  to 

be  returned  and  paid,  in  the  manner  provided  in  Section  903  (par.  482-483),  by  the 
person  selling  such  tickets; 

(5)  In  the  case  of  persons  having  the  permanent  use  of 
boxes  or  seats  in  an  opera  house  or  any  place  of  amusement 
or  a lease  for  the  use  of  such  box  or  seat  in  such  opera 
house  or  place  of  amusement  (in  lieu  of  the  tax  imposed  by 

paragraph  (1)  (par.  445),  a tax  equivalent  to  10  per  centum  of  the  amount  for  which 
a similar  box  or  seat  is  sold  for  each  performance  or  exhibition  at  which  the  box 
or  seat  is  used  or  reserved  by  or  for  the  lessee  or  holder,  such  tax  to  be  paid  by  the 
lessee  or  holder;  and 

(6)  A tax  of  cents  for  each  10  cents  or  fraction 
thereof  of  the  amount  paid  for  admission  to  any  public  per- 
formance for  profit  at  any  roof  garden,  cabaret,  or  other 
similar  entertainment,  to  which  the  charge  for  admission  is 
wholly  or  in  part  included  in  the  price  paid  for  refreshment, 
service,  or  merchandise;  the  amount  paid  for  such  admission 


When  so  sold  by 


449. 

Permanent  use  of 
box  or  seat. 


450. 

Public  performance 
at  roof  garden,  cab- 
aret or  similar  enter- 
tainment. 


♦Rate  of  tax  same  as  this  Act  except  tax  on  cabarets  lc  for  each  10c  or  fraction  and  no  provision 
made  for  tax  on  tickets  or  cards  of  admission  sold  in  excess  of  regular  price. 

64 


to  be  deemed  to  be  20  per  centum  of  the  amount  paid  for  refreshment,  service,  and 
merchandise ; such  tax  to  be  paid  by  the  person  paying  for  such  refreshment,  service, 
or  merchandise. 


(b)  No  tax  shall  be  levied  under  this  title  in  respect  to 
u f , any  admissions  all  the  proceeds  of  which  inure  exclusively 

p ' to  the  benefit  of  religious,  educational,  or  charitable  institu- 

tions, societies,  or  organizations,  societies  for  the  prevention  of  cruelty  to  children 
or  animals,  or  exclusively  to  the  benefit  of  organizations  conducted  for  the  sole 
purpose  of  maintaining  symphony  orchestras  and  receiving  substantial  support  from 
voluntary  contributions,  none  of  the  profits  of  which  are  distributed  to  members  of 
such  organizations,  or  exclusively  to  the  benefit  of  persons  in  the  military  or  naval 
forces  of  the  United  States,  or  admissions  to  agricultural  fairs  none  of  the  profits 
of  which  are  distributed  to  stockholders  or  members  of  the  association  conducting 
the  same. 


452. 

“ Admission 
fined. 


de- 


453. 

Tickets  marked. 


454. 

Dues  or  member- 
ship fees  and  initia- 
tion fees. 


(c)  The  term  “admission”  as  used  in  this  title  includes 
seats  and  tables,  reserved  or  otherwise,  and  other  similar 
accommodations,  and  the  charges  made  therefor. 

(d)  The  price  (exclusive  of  the  tax  to  be  paid  by  the 
person  paying  for  admission)  at  which  every  admission  ticket 
or  card  is  sold  shall  be  conspicuously  and.  indelibly  printed, 

stamped,  or  written  on  the  face  or  back  thereof,  together  with  the  name  of  the  vendor 
if  sold  other  than  at  the  ticket  office  of  the  theater,  opera,  or  other  place  of  amuse- 
ment. Whoever  sells  an  admission  ticket  or  card  on  which  the  name  of  the  vendor 
and  price  is  not  so  printed,  stamped,  or  written,  or  at  a price  in  excess  of  the  price 
so  printed,  stamped,  or  written  thereon,  is  guilty  of  a misdemeanor,  and  upon  con- 
viction thereof  shall  be  fined  not  more  than  $100. 

Sec.  801.  That  from  and  after  April  1,  1919,  there  shall 
be  levied,  assessed,  collected,  and  paid,  in  lieu  of  the  taxes 
imposed  by  Section  701  of  the  Revenue  Act  of  1917*,  a tax 
equivalent  to  10  per  centum  of  any  amount  paid  on  or  after 
such  date,  for  any  period  after  such  date,  (a)  as  dues  or 
membership  fees  (where  the  dues  or  fees  of  an  active  resident  annual  member  are  in 
excess  of  $10  per  year)  to  any  social,  athletic,  or  sporting  club  or  organization;  or 
(b)  as  initiation  fees  to  such  a club  or  organization,  if  such  fees  amount  to  more 
than  $10,  or  if  the  dues  or  membership  fees  (not  including  initiation  fees)  of  an  active 
resident  annual  member  are  in  excess  of  $10  per  year;  such  taxes  to  be  paid  by  the 
person  paying  such  dues  or  fees : Provided,  That  there  shall  be  exempted  from  the 
provisions  of  this  section  all  amounts  paid  as  dues  or  fees  to  a fraternal  society,  order, 
or  association,  operating  under  the  lodge  system.  In  the  case  of  life  memberships 
a life  member  shall  pay  annually,  at  the  time  for  the  payment  of  dues  by  active 
resident  annual  members,  a tax  equivalent  to  the  tax  upon  the  amount  paid  by  such 
a member,  but  shall  pay  no  tax  upon  the  amount  paid  for  life  membership. 

455  Sec.  802.  That  every  person  (a)  receiving  any  payments 

f°r  such  admission,  dues,  or  fees  shall  collect  the  amount 
ment  p y"  of  the  tax  imposed  by  Section  800  or  801  {par.  444-454 ) from 

the  person  making  such  payments,  or  (b)  admitting  any  per- 
son free  to  any  place  for  admission  to  which  a charge  is  made,  shall  collect  the 
amount  of  the  tax  imposed  by  Section  800  {par.  444-453)  from  the  person  so  admitted. 
Every  club  or  organization  having  life  members,  shall  collect  from  such  members  the 
amount  of  the  tax  imposed  by  Section  801  {par.  454).  In  all  the  above  cases  returns 
and  payments  of  the  amount  so  collected  shall  be  made  at  the  same  time  and  in  the 
same  manner  as  provided  in  Section  502  {par.  336-340). 


TITLE  IX.— EXCISE  TAXES 


456. 

On  price  for  which 
sold  or  leased. 


457. 

Automobile  trucks, 
wagons,  etc. 


Sec.  900.  That  there  shall  be  levied,  assessed,  collected, 
and  paid,  upon  the  following  articles  sold  or  leased  by  the 
manufacturer,  producer,  or  importer,  a tax  equivalent  to  the 
following  percentages  of  the  price  for  which  so  sold  or 
leased — 

(1)  Automobile  trucks  and  automobile  wagons,  (includ- 
ing tires,  inner  tubes,  parts,  and  accessories  therefor,  sold  on 
or  in  connection  therewith  or  with  the  sale  thereof),  3 per 
centum ; 


Rate  of  10%  of  amount  paid  where  dues  or  membership  fees  are  in  excess  of  $12  per  year. 

65 


(2)  Other  automobiles  and  motorcycles,  (including  tires, 
inner  tubes,  parts,  and  accessories  therefor,  sold  on  or  in 
connection  therewith  or  with  the  sale  thereof),  except  trac- 
tors, 5 per  centum; 

(3)  Tires,  inner  tubes,  parts,  or  accessories,  for  any  of 
the  articles  enumerated  in  subdivision  (1)  (par.  457),  or  (2) 
(par.  458 ) sold  to  any  person  other  than  a manufacturer  or 
producer  of  any  of  the  articles  enumerated  in  subdivision  (1) 
(par.  457),  or  (2)  (par.  458 ) 5 per  centum; 

(4)  Pianos,  organs  (other  than  pipe  organs),  piano 
players,  graphophones,  phonographs,  talking  machines,  music 
boxes,  and  records  used  in  connection  with  any  musical  in- 
strument, piano  player,  graphophone,  phonograph,  or  talking 
machine,  5 per  centum; 

(5)  Tennis  rackets,  nets,  racket  covers  and  presses,  skates, 
snowshoes,  skis,  toboggans,  canoe  paddles  and  cushions,  polo 
mallets,  baseball  bats,  gloves,  masks,  protectors,  shoes  and 

uniforms,  football  helmets,  harness  and  goals,  basket-ball  goals  and  uniforms,  golf  bags 
and  clubs,  lacrosse  sticks,  balls  of  all  kinds,  including  baseballs,  footballs,  tennis,  golf, 
lacrosse,  billiard  and  pool  balls,  fishing  rods,  and  reels,  billiard  and  pool  tables,  chess 
and  checker  boards  and  pieces,  dice,  games  and  parts  of  games  (except  playing  cards 
and  children’s  toys  and  games),  and  all  similar  articles  commonly  or  commercially 
known  as  sporting  goods,  10  per  centum; 


458. 

Automobiles  and 
motorcycles. 


459. 

Tires  or  acces- 
sories. 


460. 

Musical  instru- 
ments. 


461. 

Sporting  goods. 


462. 

Chewing  gum. 

463. 

Cameras. 

464. 

Films  and  plates. 

465. 

Candy. 


(6)  Chewing  gum  or  substitutes  therefor,  3 per  centum; 

(7)  Cameras,  weighing  not  more  than  100  pounds,  10 
per  centum ; 

(8)  Photographic  films  and  plates,  other  than  moving- 
picture  films,  5 per  centum; 

(9)  Candy,  5 per  centum ; 


466. 

Firearms 


(10)  Firearms,  shells,  and  cartridges,  except  those  sold 
for  the  use  of  the  United  States,  any  State,  Territory,  or 
possession  of  the  United  States,  any  political  subdivision 
thereof,  the  District  of  Columbia,  or  any  foreign  country  while  engaged  against  the 
German  Government  in  the  present  war,  10  per  centum ; 


467. 

Knives. 

468. 

Daggers,  stilettos, 
etc. 

469. 

Portable  Electric 
fans. 

470. 

Thermos  appliances. 


(11)  Hunting  and  bowie  knives,  10  per  centum; 

(12)  Dirk  knives,  daggers,  sword  canes,  stilettos,  and 
brass  or  metallic  knuckles,  100  per  centum ; 

(13)  Portable  electric  fan,  5 per  centum; 


(14)  Thermos  and  thermostatic  bottles,  carafes,  jugs,  or 
other  thermostatic  containers,  5 per  centum; 

(15)  Cigar  or  cigarette  holders  and  pipes,  composed 
wholly  or  in  part  of  meerschaum  or  amber,  humidors,  and 
smoking  stands,  10  per  centum; 

(16)  Automatic  slot-device  vending  machines,  5 per  centum, 
and  automatic  slot-device  weighing  machines,  10  per  centum ; 
if  the  manufacturer,  producer,  or  importer  of  any  such  ma- 
chine operates  it  for  profit,  he  shall  pay  a tax  in  respect  to 

each  such  machine  put  into  operation  equivalent  to  5 per  centum  of  its  fair  market 
value  in  the  case  of  a vending  machine,  and  10  per  centum  of  its  fair  market  value 
in  the  case  of  a weighing  machine; 


471. 

Smoking  articles. 

472. 

Automatic  slot  de 
vice  machines. 


473. 

Liveries. 

474. 

Sporting  garments. 

475. 

Articles  made  of 
fur. 


(17)  Liveries  and  livery  boots  and  hats,  10  per  centum; 

(18)  Hunting  and  shooting  garments  and  riding  habits, 
10  per  centum ; 

(19)  Articles  made  of  fur  on  the  hide  or  pelt,  or  of 
which  any  such  fur  is  the  component  material  of  the  chief 
value,  10  per  centum ; 

66 


476. 

Yachts  and  boats. 


477. 

Toilet  soaps. 

478. 

Sales  by  whole- 
salers. 


(20)  Yachts  and  motor  boats  not  designed  for  trade, 
fishing,  or  national  defense ; and  pleasure  boats  and  pleasure 
canoes  if  sold  for  more  than  $15,  10  per  centum ; and 

(21)  Toilet  soaps  and  toilet  soap  powders,  3 per  centum. 


If  any  manufacturer,  producer,  or  importer  of  any  of  the 
articles  enumerated  in  this  section  customarily  sell  such  articles 
both  at  wholesale  and  at  retail,  the  tax  in  the  case  of  any 
article  sold  by  him  at  retail  shall  be  computed  on  the  price 
for  which  like  articles  are  sold  by  him  at  wholesale. 

479.  The  taxes  imposed  by  this  section  shall,  in  the  case  of  any  article  in  respect 
to  which  a corresponding  tax  is  imposed  by  Section  600  of  the  Revenue  Act  of  1917*, 
be  in  lieu  of  such  tax. 

Sec.  901.  That  if  any  person  manufactures,  produces  or 
imports  any  article  enumerated  in  Section  900  (par.  457-477), 
or  leases  or  licenses  for  exhibition  any  positive  motion- 
picture  film  containing  a picture  ready  for  projection,  and, 
whether  through  any  agreement,  arrangement,  or  understand- 
ing, or  otherwise,  sells,  leases  or  licenses  such  article  at  less  than  the  fair  market 
price  obtainable  therefor,  either  (a)  in  such  manner  as  directly  or  indirectly  to  benefit 
such  person  or  any  person  directly  or  indirectly  interested  in  the  business  of  such 
person,  or  (b)  with  intent  to  cause  such  benefit,  the  amount  for  which  such  article 
is  sold,  leased  or  licensed  shall  be  taken  to  be  the  amount  which  would  have  been 
received  from  the  sale,  lease,  or  license  of  such  article  if  sold,  leased  or  licensed  at  the 
fair  market  price. 


480. 

Where  person  sells 
or  leases  at  less  than 
fair  market  price. 


Sec.  902.  That  there  shall  be  levied,  assessed,  collected, 
and  paid  upon  sculpture,  paintings,  statuary,  art  porcelains, 
and  bronzes,  sold  by  any  person  other  than  the  artist,  a tax 
equivalent  to  10  per  centum  of  the  price  for  which  so  sold. 


481. 

Sculpture,  paint- 
ings,  etc. 

This  section  shall  not  apply  to  the  sale  of  any  such  article  to  an  educational  institution 
or  public  art  museum. 

^g2  Sec.  903j  That  every  person  liable  for  any  tax  imposed 


Monthly  returns. 


by  Section  900  (par.  456-479),  902  (par.  481),  or  906  (par. 


510),  shall  make  monthly  returns  under  oath  in  duplicate  and 
pay  the  taxes  imposed  by  such  sections  to  the  collector  for  the  district  in  which  is 
located  the  principal  place  of  business.  Such  returns  shall  contain  such  information 
and  be  made  at  such  times  and  in  such  manner  as  the  Commissioner,  with  the  approval 
of  the  Secretary,  may  by  regulations  prescribe. 

The  tax  shall,  without  assessment  by  the  Commissioner 


Payment  and  pen- 


alty. 


484. 

Effective  May  1, 
1919,  tax  on  amount 
paid  in  excess  of 
specified  price. 


or  notice  from  the  collector,  be  due  and  payable  to  the  col- 
lector at  the  time  so  fixed  for  filing  the  return.  If  the  tax  is 
not  paid  when  due,  there  shall  be  added  as  part  of  the  tax 
a penalty  of  5 per  centum,  together  with  interest  at  the  rate  of  1 per  centum  for  each 
full  month,  from  the  time  when  the  tax  became  due. 

Sec.  904.  (a)  That  on  and  after  May  1,  1919,  there  shall 
be  levied,  assessed,  collected,  and  paid  a tax  equivalent  to 
10  per  centum  of  so  much  of  the  amount  paid  for  any  of  the 
following  articles  as  is  in  excess  of  the  price  hereinafter 
specified  as  to  each  such  article,  when  such  article  is  sold 
by  or  for  a dealer  or  his  estate  on  or  after  such  date  for 

consumption  or  use — 

485.  (1)  Carpets  and  rugs,  including  fiber,  except  imported  and  American  rugs 
made  principally  of  wool,  on  the  amount  in  excess  of  $5  per  square  yard; 

486.  (2)  Picture  frames,  on  the  amount  in  excess  of  $10  each; 

487.  (3)  Trunks,  on  the  amount  in  excess  of  $50  each; 

488.  (4)  Valises,  traveling  bags,  suit  cases,  hat  boxes  used  by  travelers,  and  fitted 
toilet  cases,  on  the  amount  in  excess  of  $25  each ; 

489.  (5)  Purses,  pocketbooks,  shopping  and  hand  bags,  on  the  amount  in  excess 
of  $7.50  each; 

490.  (6)  Portable  lighting  fixtures,  including  lamps  of  all  kinds  and  lamp  shades, 
on  the  amount  in  excess  of  $25  each ; 

*The  following  taxes  are  upon  price  for  which  sold  by  manufacturer,  producer  or  importer: 
Automobiles,  automobile  trucks,  automobile  wagons,  motorcycles;  piano-players,  graphophones,  phon- 
ographs, talking  machines  and  records;  sporting  goods;  and  cameras,  3%;  chewing  gum  2%. 

67 


491.  (7)  Umbrellas,  parasols,  and  sun  shades,  on  the  amount  in  excess  of  $4  each; 

492.  (8)  Fans,  on  the  amount  in  excess  of  $1  each; 

493.  (9)  House  or  smoking  coats  or  jackets,  and  bath  or  lounging  robes,  on  the 
amount  in  excess  of  $7.50  each ; 

494.  (10)  Men’s  waistcoats,  sold  separately  from  suits,  on  the  amount  in  excess 
of  $5  each; 

495.  (11)  Women’s’  and  misses’  hats,  bonnets,  and  hoods,  on  the  amount  in  excess 
of  $15  each; 

496.  (12)  Men’s  and  boys’  hats,  on  the  amount  in  excess  of  $5  each; 

497.  (13)  Men’s  and  boys’  caps,  on  the  amount  in  excess  of  $2  each; 

498.  (14)  Men’s,  women’s,  misses’,  and  boys’  boots,  shoes,  pumps,  and  slippers,  not 
including  shoes  or  appliances  made  to  order  for  any  person  having  a crippled  or 
deformed  foot  or  ankle,  on  the  amount  in  excess  of  $10  per  pair; 


499.  (15)  Men’s  and  boys’  neckties  and  neckwear,  on  the  amount  in  excess  of 
$2  each; 

500.  (16)  Men’s  and  boys’  silk  stockings  or  hose,  on  the  amount  in  excess  of  $1 
per  pair; 

501.  (17)  Women’s  and  misses’  silk  stockings  or  hose,  on  the  amount  in  excess  of 
$2  per  pair; 

502. 


503. 
wear, 

504. 


(18)  Men’s  shirts,  on  the  amount  in  excess  of  $3  each; 

(19)  Men’s,  women’s,  misses’,  and  boys’  pajamas,  night  gowns,  and  under- 
on  the  amount  in  excess  of  $5  each;  and 

(20)  Kimonos,  petticoats,  and  waists,  on  the  amount  in  excess  of  $15  each. 

-n_  (b)  The  tax  imposed  by  this  section  shall  not  apply 

5 tt  nf*  n (1)  to  any  article  enumerated  in  paragraphs  (2)  to  (8),  both 

exceptions.  inclusive,  of  subdivision  (a)  (par.  486-492),  if  such  article 

is  made  of  or  ornamented,  mounted,  or  fitted  with,  precious  metals  or  imitations 
thereof  or  ivory,  or  (2)  to  any  article  made  of  fur  on  the  hide  or  pelt,  or  of  which 
any  such  fur  is  the  component  material  of  chief  value,  or  to  (3)  any  article  enumerated 
in  subdivision  (17)  or  (18)  of  Section  900  (par.  473-474). 

(c)  The  taxes  imposed  by  this  section  shall  be  paid  by  the 
purchaser  to  the  vendor  at  the  time  of  the  sale  and  shall  be 
collected,  returned,  and  paid  to  the  United  States  by  such 
vendor  in  the  same  manner  as  provided  in  Section  502  (par. 
336-340). 

Sec.  905.  That  on  and  after  April  1,  1919,  there  shall  be 
levied,  assessed,  collected,  and  paid  (in  lieu  of  the  tax  im- 
posed by  subdivision  (e)  of  Section  600  of  the  Revenue  Act 
of  1917)  * upon  all  articles  commonly  or  commercially  known 
as  jewelry,  whether  real  or  imitation;  pearls,  precious  and  semi-precious  stones,  and 
imitations  thereof;  articles  made  of,  or  ornamented,  mounted  or  fitted  with,  precious 
metals  or  imitations  thereof  or  ivory  (not  including  surgical  instruments)  ; watches; 
clocks;  opera  glasses;  lorgnettes;  marine  glasses;  field  glasses;  and  binoculars;  upon 
any  of  the  above  when  sold  by  or  for  a dealer  or  his  estate  for  consumption  or  use, 
a tax  equivalent  to  5 per  centum  of  the  price  for  which  so  sold. 

Every  person  selling  any  of  the  articles  enumerated  in 
this  section  shall  make  returns  under  oath  in  duplicate 
(monthly  or  quarterly  as  the  Commissioner,  with  the  approval 
of  the  Secretary,  may  prescribe)  and  pay  the  taxes  imposed  in  respect  to  such  articles 
by  this  section  to  the  collector  for  the  district  in  which  is  located  the  principal  place 
of  business.  Such  returns  shall  contain  such  information  and  be  made  at  such  times 
and  in  such  manner  as  the  Commissioner,  with  the  approval  of  the  Secretary,  may  by 
regulations  prescribe. 

_nQ  The  tax  shall,  without  assessment  by  the  Commissioner 

i)Ut;  , or  notice  from  the  collector,  be  due  and  payable  to  the  col- 

Fayment  ana  pen-  iector  at  t^e  tjme  so  fixe(j  for  filing  the  return.  If  the  tax 
alt^*  is  not  paid  when  due,  there  shall  be  added  as  part  of  the  tax 

a penalty  of  5 per  centum,  together  with  interest  at  the  rate  of  1 per  centum  for  each 
full  month,  from  the  time  when  the  tax  became  due. 


506. 

Payable  by  pur- 
chaser. 


507. 

Effective  April  1, 
1919,  tax  on  jewelry. 


508. 

Returns. 


#Tax  at  rate  of  3%. 


68 


510. 

Effective  May  1, 
1919,  license  tax  on 
rentals  of  motion  pic- 
ture films. 


511. 

Tax  of  lc  for  each 
25c  or  fraction  of 
amount  paid  for — 


512. 

Perfumes,  cos- 
metics, etc.,  used  for 
toilet  purposes. 


Sec.  906.  That  on  and  after  the  1st  day  of  May,  1919, 
any  person  engaged  in  the  business  of  leasing  or  licensing  for 
exhibition  positive  motion-picture  films  containing  pictures 
ready  for  projection  shall  pay  monthly  an  excise  tax  in 
respect  to  carrying  on  such  business  equal  to  5 per  centum 
of  the  total  rentals  earned  from  each  such  lease  or  license 
during  the  preceding  month.  If  a person  owning  such  a film  exhibits  it  for  profit 
he  shall  pay  a tax  equivalent  to  5 per  centum  of  the  fair  rental  or  license  value  of 
such  film  at  the  time  and  place  where  and  for  the  period  during  which  exhibited. 
If  any  such  person  has,  prior  to  December  6,  1918,  made  a bona  fide  contract  with 
and  person  for  the  lease  or  licensing,  after  the  tax  imposed  by  this  section  takes 
effect,  of  such  a film  for  exhibition  for  profit,  and  if  such  contract  does  not  permit 
the  adding  of  the  whole  of  the  tax  imposed  by  this  section  to  the  amount  to  be  paid 
under  such  contract,  then  the  lessee  or  licensee  shall,  in  lieu  of  the  lessor  or  licensor, 
pay  so  much  of  such  tax  as  is  not  so  permitted  to  be  added  to  the  contract  price. 
The  tax  imposed  by  this  section  shall  be  in  lieu  of  the  tax  imposed  by  subdivisions 
(c)  and  (d)  of  Section  600  of  the  Revenue  Act  of  1917.* 

Sec.  907.  (a)  That  on  and  after  May  1,  1919,  there  shall 
be  levied,  assessed,  collected  and  paid  (in  lieu  of  the  taxes 
imposed  by  subdivisions  (g)  and  (h)  of  Section  600  of  the 
Revenue  Act  of  1917)**  a tax  of  1 cent  for  each  25  cents 
or  fraction  thereof  of  the  amount  paid  for  any  of  the  follow- 
ing articles  when  sold  by  or  for  a dealer  or  his  estate  on  or  after  such  date  for 
consumption  or  use; 

(1)  Perfumes,  essences,  extracts,  toilet  waters,  cosmetics, 
petroleum  jellies,  hair  oils,  pomades,  hair  dressings,  hair 
restoratives,  hair  dyes,  tooth  and  mouth  washes,  dentrifices, 
tooth  pastes,  aromatic  cachous,  toilet  powders  (other  than 
soap  powders),  or  any  similar  substance,  article,  or  prepara- 
tion by  whatsoever  name  known  or  distinguished,  any  of  the  above  which  are  used 
or  applied  or  intended  to  be  used  or  applied  for  toilet  purposes; 

(2)  Pills,  tablets,  powders,  tinctures,  troches  or  lozenges, 
sirups,  medicinal  cordials  or  bitters,  anodynes,  tonics,  plasters, 

P liniments,  salves,  ointments,  pastes,  drops,  waters  (except 

those  taxed  under  Section  628  (par.  407-409),  of  this  Act), 
essences,  spirits,  oils,  and  other  medicinal  preparations,  compounds,  or  compositions 
(not  including  serums  and  antitoxins),  upon  the  amount  paid  for  any  of  the  above 
as  to  which  the  manufacturer  or  producer  claims  to  have  any  private  formula,  secret, 
or  occult  art  for  making  or  preparing  the  same,  or  has  or  claims  to  have  any 
exclusive  right  or  title  to  the  making  or  preparing  the  same,  or  which  are  prepared, 
uttered,  vended,  or  exposed  for  sale  under  any  letter  patent,  or  trade-mark,  or  which 
(if  prepared  by  any  formula,  published  or  unpublished)  are  held  out  or  recommended 
to  the  public  by  the  makers,  vendors,  or  proprietors  thereof  as  proprietary  medicines 
or  medicinal  proprietary  articles  or  preparations,  or  as  remedies  or  specifics  for  any 
disease,  diseases,  or  affection  whatever  affecting  the  human  or  animal  body:  Provided, 
That  the  provisions  of  this  section  shall  not  apply  to  the  sale  of  vaccines  and 
bacterines  which  are  not  advertised  to  the  general  lay  public,  nor  to  the  sale  by  a 
physician  in  personal  attendance  upon  a patient  of  medicinal  preparations  not  so 
advertised. 

(b)  The  taxes  imposed  by  this  section  shall  be  collected 
by  whichever  of  the  following  methods  the  Commissioner  may 
deem  expedient:  (1)  by  stamp  affixed  to  such  article  by  the 
vendor,  the  cost  of  which  shall  be  reimbursed  to  the  vendor 
by  the  purchaser;  or  (2)  by  payment  to  the  vendor  by  the 
purchaser  at  the  time  of  the  sale,  the  taxes  so  collected  being  returned  and  paid 
to  the  United  States  by  such  vendor  in  the  same  manner  as  provided  in  Section  502 
(par.  336-340). 

TITLE  X.— SPECIAL  TAXES 

515.  Sec.  1000.  (a)  That  on  and  after  July  1,  1918,  in  lieu 

Effective  July  1,  of  the  tax  imposed  by  the  first  subdivision  of  Section  407 
1918.  of  the  Revenue  Act  of  1916*** — 


513. 

Medicinal 

arations. 


514. 

Commissioner  t o 
prescribe  method  of 
paying  tax. 


#Moving-picture  films  (which  have  not  been  exposed)  of  lc  per  linear  foot  and  positive  moving- 
picture  films,  containing  a picture  ready  for  projection,  l/i  of  lc. 

**Tax  at  the  rate  of  2%  of  price  for  which  sold  by  manufacturer,  producer  or  importer. 
***Tax  at  the  rate  of  50c  for  each  $1,000  value  of  stock  exceeding  $99,000,  and  in  case  of 
foreign  corporations  proportioned. 

69 


518. 

Insurance 

nies. 


compa- 


516.  (1)  Every  domestic  corporation  shall  pay  annually  a 

Capital  stock  tax.  special  excise  tax  with  respect  to  carrying  on  or  doing 
business,  equivalent  to  $1  for  each  $1,000  or  so  much  of  the 
fair  average  value  of  its  capital  stock  for  the  preceding  year  ending  June  thirtieth 
as  is  in  excess  of  $5,000.  In  estimating  the  value  of  capital  stock  the  surplus  and 
undivided  profits  shall  be  included; 

517  (2)  Every  foreign  corporation  shall  pay  annually  a special 

F n r p i*  o-  n rnrnn-  excise  tax  with  respect  to  carrying  on  or  doing  business  in  the 
rations  8 P United  States,  equivalent  to  $1  for  each  $1,000  of  the  average 

amount  of  capital  employed  in  the  transaction  of  its  business 
in  the  United  States  during  the  preceding  year  ending  June  thirtieth. 

(b)  In  computing  the  tax  the  case  of  insurance  companies 
such  deposits  and  reserve  funds  as  they  are  required  by  law 
or  contract  to  maintain  or  hold  for  the  protection  of  or  pay- 
ment to  or  apportionment  among  policyholders  shall  not  be 
included. 

(c)  The  taxes  imposed  by  this  section  shall  not  apply  in 
any  year  to  any  corporation  which  was  not  engaged  in  business 
(or  in  the  case  of  a foreign  corporation  not  engaged  in 
business  in  the  United  States)  during  the  preceding  year 

ending  June  30,  nor  to  any  corporation  enumerated  in  Section  231  {par.  128-142). 

The  taxes  imposed  by  this  section  shall  apply  to  mutual 
insurance  companies,  and  in  the  case  of  every  such  domestic 
company  the  tax  shall  be  equivalent  to  $1  for  each  $1,000 
of  the  excess  over  $5,000  of  the  sum  of  its  surplus  or  con- 
tingent reserves  maintained  for  the  general  use  of  the  business 
and  any  reserves  the  net  additions  to  which  are  included  in  net  income  under  the 
provisions  of  Title  II,  as  of  the  close  of  the  preceding  accounting  period  used  by 
such  company  for  purposes  of  making  its  income  tax  return : Provided,  That  in  the 
case  of  a Foreign  Mutual  Insurance  Company  the  tax  shall  be  equivalent  to  $1  for 
each  $1,000  of  the  same  proportion  of  the  sum  of  such  surplus  and  reserves,  which 
the  reserve  fund  upon  business  transacted  within  the  United  States  is  of  the  total 
reserve  upon  all  business  transacted,  as  of  the  close  of  the  preceding  accounting 
period  used  by  such  company  for  purposes  of  making  its  income  tax  return. 

521.  (d)  Sec.  257  {par.  203-204)  shall  apply  to  all  returns  filed  with  the  Com- 

missioner for  purposes  of  the  tax  imposed  by  this  section. 


519. 

Corporations  e x 
empt. 


520. 

Taxes  apply  to 
mutual  insurance 
companies. 


522. 

Effective  January 
1,  1919. 

523. 

Brokers.  Addi- 
tional tax  if  member 
of  exchange. 


Sec.  1001.  That  on  and  after  January  1,  1919,  there 
shall  be  levied,  collected,  and  paid  annually  the  following 
special  taxes — 

(1)  Brokers  shall  pay  $50.  Every  person  whose  business 
it  is  to  negotiate  purchases  or  sales  of  stocks,  bonds,  ex- 
change, bullion,  coined  money,  bank  notes,  promissory  notes, 
other  securities,  produce  or  merchandise,  for  others,  shall  be 
regarded  as  a broker.  If  a broker  is  a member  of  a stock 

exchange,  or  if  he  is  a member  of  any  produce  exchange,  board  of  trade,  or  similar 
organization,  where  produce  or  merchandise  is  sold,  he  shall  pay  an  additional  amount 
as  follows:  If  the  average  value,  during  the  preceding  year  ending  June  30,  of  a 
seat  or  membership  in  such  exchange  or  organization  was  $2,000  or  more  but  not 
more  than  $5,000,  $100;  if  such  value  was  more  than  $5,000,  $150. 

(2)  Pawnbrokers  shall  pay  $100.  Every  person  whose 
business  or  occupation  it  is  to  take  or  receive,  by  way  of 
pledge,  pawn,  or  exchange,  any  goods,  wares,  or  merchandise, 

or  any  kind  of  personal  property  whatever,  as  security  for  the  repayment  of  money 
loaned  thereon,  shall  be  regarded  as  a pawn  broker. 

525  (3)  Ship  brokers  shall  pay  $50.  Every  person  whose 

Shio  brokers  business  it  is  as  a broker  to  negotiate  freights  and  other 

P * business  for  the  owners  of  vessels,  or  for  the  shippers  of 

consignors  or  consignees  of  freight  carried  by  vessels,  shall  be  regarded  as  a ship 
broker. 

52g  (4)  Customhouse  brokers  shall  pay  $50.  Every  person 

Customhouse  brok-  whose  occupation  it  is,  as  the  agent  of  others,  to  arrange 
’ entries  and  other  customhouse  papers,  or  transact  business  at 
any  port  of  entry  relating  to  the  importation  or  exportation 
of  goods,  wares,  or  merchandise,  shall  be  regarded  as  a customhouse  broker. 

70 


524. 

Pawnbrokers. 


527.  (5)  Proprietors  of  theatres,  museums,  and  concert  halls, 

Theatres,  museums  where  a charge  for  admission  is  made,  having  a seating 
and  concert  halls.  capacity  of  not  more  than  two  hundred  and  fifty,  shall  pay 
$50 ; having  a seating  capacity  of  more  than  two  hundred  and 
fifty  and  not  exceeding  five  hundred,  shall  pay  $100 ; having  a seating  capacity  exceeding 
five  hundred  and  not  exceeding  eight  hundred,  shall  pay  $150;  having  a seating 
capacity  of  more  than  eight  hundred,  shall  pay  $200.  Every  edifice  used  for  the 
purpose  of  dramatic  or  operatic  or  other  representations,  plays,  or  performances,  for 
admission  to  which  entrance  money  is  received,  not  including  halls  or  armories  rented 
or  used  occasionally  for  concerts  or  theatrical  representations,  and  not  including  edifices 
owned  by  religious,  educational  or  charitable  institutions,  societies  or  organizations 
where  all  the  proceeds  from  admissions  inure  exclusively  to  the  benefit  of  such 
institutions,  societies  or  organizations  or  exclusively  to  the  benefit  of  persons  in  the 
military  or  naval  forces  of  the  United  States,  shall  be  regarded  as  a theater : Provided , 
That  in  cities,  towns,  or  villages  of  five  thousand  inhabitants  or  less  the  amount  of 
such  payment  shall  be  one-half  of  that  above  stated : Provided  further , That  whenever 
any  such  edifice  is  under  lease  at  the  time  the  tax  is  due,  the  tax  shall  be  paid  by 
the  lessee,  unless  otherwise  stipulated  between  the  parties  to  the  lease. 


528. 

Circuses. 


(6)  The  proprietor  or  proprietors  of  circuses  shall  pay 
$100.  Every  building,  space,  tent,  or  area,  where  feats  of 
horsemanship  or  acrobatic  sports  or  theatrical  performances! 
not  otherwise  provided  for  in  this  section  are  exhibited  shall  be  regarded  as  a circus : 
Provided,  That  no  special  tax  paid  in  one  State,  Territory,  or  the  District  of  Columbia 
shall  exempt  exhibitions  from  the  tax  in  another  State,  Territory,  or  the  District 
of  Columbia,  and  but  one  special  tax  shall  be  imposed  for  exhibitions  within  any  one 
State,  Territory,  or  District. 


529. 

Other  public  ex- 
hibitions o r shows. 


(7)  Proprietors  or  agents  of  all  other  public  exhibitions 
or  shows  for  money  not  enumerated  in  this  section  shall 
pay  $15 : Provided,  That  a special  tax  paid  in  one  State, 
Territory,  or  the  District  of  Columbia  shall  not  exempt 
exhibitions  from  the  tax  in  another  State,  Territory,  or  the  District  of  Columbia, 
and  but  one  special  tax  shall  be  required  for  exhibitions  within  any  one  State,  Terri- 
tory, or  the  District  of  Columbia : Provided  further,  That  this  paragraph  shall  not 
apply  to  Chautauquas,  lecture  lyceums,  agricultural  or  industrial  fairs,  or  exhibitions 
held  under  the  auspices  of  religious  or  charitable  associations;  Provided  further, 
That  an  aggregation  of  entertainments,  known  as  a street  fair,  shall  not  pay  a larger 
tax  than  $100  in  any  State,  Territory,  or  in  the  District  of  Columbia. 


coq  (8)  Proprietors  of  bowling  alleys  and  billiard  rooms  shall 

■Rnwlino-  alWc  an  A Pa7  $10  for  each  alley  or  table-  Every  building  or  place  where 
billiard  tables  ^ bowls  are  thrown  or  where  games  of  billiards  or  pool  are 

played,  except  in  private  homes,  shall  be  regarded  as  a bowling 
alley  or  a billiard  room,  respectively. 

(9)  Proprietors  of  shooting  galleries  shall  pay  $20.  Every 
building,  space,  tent,  or  area,  where  a charge  is  made  for  the 
discharge  of  firearms  at  any  form  of  target  shall  be  regarded 


531. 

Shooting 


galleries. 

as  a shooting  gallery. 
532. 

Riding  academies. 


(10)  Proprietors  of  riding  academies  shall  pay  $100. 
Every  building,  space,  tent,  or  area,  where  a charge  is  made 
for  instruction  in  horsemanship  or  for  facilities  for  the 

practice  of  horsemanship  shall  be  regarded  as  a riding  academy. 

(11)  Persons  carrying  on  the  business  of  operating  or 
renting  passenger  automobiles  for  hire  shall  pay  $10  for 


533. 
Passenger 


automo- 


biles for  hire. 

mobile  having  a 

534. 

Additional 
brewers,  etc.,  where 
prohibited. 


; capacity  of  more  than 
20  for  each  such  auto- 


each  such  automobile  having  a seatin 
two  and  not  more  than  seven,  and  ! 
seating  capacity  of  more  than  seven. 

(12)  Every  person  carrying  on  the  business  of  a brewer 
tax  on  distiller,  wholesale  liquor  dealer,  retail  liquor  dealer,  whole 


sale  dealer  in  malt  liquor,  retail  dealer  in  malt  liquor,  or 
manufacturer  of  stills,  as  defined  in  Section  3244  as  amended 
and  Section  3247  of  the  Revised  Statutes,  in  any  State, 
Territory,  or  District  of  the  United  States  contrary  to  the  laws  of  such  State,  Terri- 
tory, or  District,  or  in  any  place  therein  in  which  carrying  on  such  business  is  pro- 
hibited by  local  or  municipal  law,  shall  pay,  in  addition  to  all  other  taxes,  special  or 
otherwise,  imposed  by  existing  law  or  by  this  Act,  $1,000. 


71 


535.  The  payment  of  the  tax  imposed  by  this  subdivision  shall  not  be  held  to 
exempt  any  person  from  any  penalty  or  punishment  provided  for  by  the  laws  of  any 
State,  Territory,  or  District  for  carrying  on  such  business  in  such  State,  Territory,  or 
District,  or  in  any  manner  to  authorize  the  commencement  or  continuance  of  such 
business  contrary  to  the  laws  of  such  State,  Territory,  or  District,  or  in  places 
prohibited  by  local  or  municipal  law. 

536.  The  taxes  imposed  by  this  section  shall,  in  the  case  of  persons  upon  whom 
a corresponding  tax  is  imposed  by  Section  407  of  the  Revenue  Act  of  1916,*  be 
in  lieu  of  such  tax. 


540. 

Cigar  manufactur- 
ers. 


537  Sec.  1002.  That  on  and  after  January  1,  1919,  there  shall 

Tav  rm  fnr  be  collected,  and  paid  annually,  in  lieu  of  the  taxes 

year  ending  Tune  30  imP°se.d  by  Section  408  of  the  Revenue  Act  of  1916**,  the 
y s J following  special  taxes,  the  amount  of  such  taxes  to  be  com- 

puted on  the  basis  of  the  sales  for  the  preceding  year  ending  June  30 — 

Manufacturers  of  tobacco  whose  annual  sales  do  not 

538.  exceed  fifty  thousand  pounds  shall  each  pay  $6; 

Tobacco  manufac-  Manufacturers  of  tobacco  whose  annual  sales  exceed  fifty 

turers.  thousand  and  do  not  exceed  one  hundred  thousand  pounds 

shall  each  pay  $12 ; 

Manufacturers  of  tobacco  whose  annual  sales  exceed  one  hundred  thousand  and 
do  not  exceed  two  hundred  thousand  pounds  shall  each  pay  $24; 

539.  Manufacturers  of  tobacco  whose  annual  sales  exceed  two  hundred  thousand 
pounds  shall  each  pay  $24,  and  at  the  rate  of  16  cents  per  thousand  pounds,  or 
fraction  thereof,  in  respect  to  the  excess  over  two  hundred  thousand  pounds; 

Manufacturers  of  cigars  whose  annual  sales  do  not  exceed 
fifty  thousand  cigars  shall  each  pay  $4; 

Manufacturers  of  cigars  whose  annual  sales  exceed  fifty 
thousand  and  do  not  exceed  one  hundred  thousand  cigars 
shall  each  pay  $6; 

Manufacturers  of  cigars  whose  annual  sales  exceed  one  hundred  thousand  and 
do  not  exceed  two  hundred  thousand  cigars  shall  each  pay  $12; 

Manufacturers  of  cigars  whose  annual  sales  exceed  two  hundred  thousand  and 
do  not  exceed  four  hundred  thousand  cigars  shall  each  pay  $24; 

541.  Manufacturers  of  cigars  whose  annual  sales  exceed  four  hundred  thousand 
cigars  shall  each  pay  $24,  and  at  the  rate  of  10  cents  per  thousand  cigars,  or  fraction 
thereof  in  respect  to  the  excess  over  four  hundred  thousand  cigars ; 

Manufacturers  of  cigarettes,  including  small  cigars 
weighing  not  more  than  three  pounds  per  thousand,  shall 
each  pay  at  the  rate  of  6 cents  for  every  ten  thousand 
cigarettes,  or  fraction  thereof. 

In  arriving  at  the  amount  of  special  tax  to  be  paid 
under  this  section,  and  in  the  levy  and  collection  of  such 
tax,  each  person  engaged  in  the  manufacture  of  more  than 
one  of  the  classes  of  articles  specified  in  this  section  shall 
be  considered  and  deemed  a manufacturer  of  each  class  separately. 

Sec.  1003.  That  sixty  days  after  the  passage  of  this  Act, 
and  thereafter  on  July  1 in  each  year,  and  also  at  the  time 
of  the  original  purchase  of  a new  boat  by  a user,  if  on  any 
other  date  than  July  1,  there  shall  be  levied,  assessed,  collected, 
and  paid  in  lieu  of  the  tax  imposed  by  Section  603  of  the 
Revenue  Act  of  1917,***  upon  the  use  of  yachts,  pleasure  boats, 
power  boats,  and  sailing  boats,  of  over  five  net  tons,  and 
motor  boats  with  fixed  engines,  not  used  exclusively  for 
trade,  fishing  or  national  defense,  or  not  built  according  to  plans  and  specifications 
approved  by  the  Navy  Department,  a special  excise  tax  to  be  based  on  each  yacht 
or  boat,  at  rates  as  follows:  Yachts,  pleasure  boats,  power  boats,  motor  boats  with 
fixed  engines,  and  sailing  boats,  of  over  five  net  tons,  length  not  over  fifty  feet,  $1 
for  each  foot;  length  over  fifty  feet  and  not  over  one  hundred  feet,  $2  for  each 
foot;  length  over  one  hundred  feet,  $4  for  each  foot;  motor  boats  of  not  over  five 
net  tons  with  fixed  engines,  $10. 


542. 

Cigarette  manufac- 
turers. 

543. 

Applied  to  each 
class. 


544. 

Use  of  yachts  and 
boats.  Tax  applicable 
60  days  after  passage 
of  act  at  original 
purchase  of  new  boat 
and  July  1 each  year. 


•Special  taxes  as  follows:  Brokers,  $30;  pawnbrokers,  $50;  shipbrokers,  $20;  custom  house 
brokers,  $10;  proprietors  of  theatres,  museums  and  concert  halls  one-half  rates  specified  in  this  act; 
proprietors  of  circuses  $100;  proprietors  or  agents  of  other  public  exhibitions  or  shows  $10; 
proprietors  of  bowling  alleys  and  billiard  rooms,  $5  each  alley  or  table. 

••Rates  one-half  those  specified  in  this  Act. 

•••Rates  one-half  those  specified  in  this  Act. 

72 


547. 

Tax  paid  credited 
or  refunded. 


545.  In  determining  the  length  of  such  yachts,  pleasure  boats,  power  boats,  motor 
boats  with  fixed  engines,  and  sailing  boats,  the  measurement  of  over-all  length 
shall  govern. 

_4fi  In  the  case  of  a tax  imposed  at  the  time  of  the  original 

. , purchase  of  a new  boat  on  any  other  date  than  July  1,  and 

lax  proportioned.  jn  ^ case  Qf  ^ tax  taking  effect  sixty  days  after  the 

passage  of  this  Act,  the  amount  to  be  paid  shall  be  the  same  number  of  twelfths  of 
the  amount  of  the  tax  as  the  number  of  calendar  months  (including  the  month  of 
sale,  or  the  month  in  which  is  included  the  sixty-first  day  after  the  passage  of  this 
Act,  as  the  case  may  be)  remaining  prior  to  the  following  July  1. 

If  the  tax  imposed  by  Section  603  of  the  Revenue  Act  of 
1917,  for  the  fiscal  year  ending  June  30,  1919,  has  been  paid 
in  respect  to  the  use  of  any  boat,  the  amount  so  paid  shall 
under  such  regulations  as  the  Commissioner,  with  the 
approval  of  the  Secretary,  may  prescribe,  be  credited  upon  the  first  tax  due  under 
this  section  in  respect  to  the  use  of  such  boat,  or  be  refunded  to  the  person  paying 
the  first  tax  imposed  by  this  section  in  respect  to  the  use  of  such  boat. 
r4g  Sec.  1004.  That  if  the  tax  imposed  by  Section  407  or 

i:~„  t 408  of  the  Revenue  Act  of  1916,  for  the  fiscal  year  ending 
tax  stamo  CU  01  June  ^0,  1919,  has  been  paid  by  any  person  subject  to  the 
* p*  corresponding  tax  imposed  by  this  title,  collectors  may  issue 

a receipt  in  lieu  of  special  tax  stamp  for  the  amount  by  which  the  tax  under  this 

title  is  in  excess  of  that  paid  or  payable  and  evidenced  by  stamp  under  the  Revenue 

Act  of  1916.  Such  receipt  shall  be  posted  as  in  the  case  of  the  special  tax  stamp, 

as  provided  by  law,  and  with  it,  within  the  place  of  business  of  the  taxpayer. 

If  the  corresponding  tax  imposed  by  Section  407  of  the 
Tax  oaid  credited  Revenue  Act  of  1916  was  not  payable  by  stamp,  the  amount 
p * paid  under  such  section  for  any  period  for  which  a tax  is 

also  imposed  by  this  title  may  be  credited  against  the  tax  imposed  by  this  title. 

Sec.  1005.  That  any  person  who  carries  on  any  business 
or  occupation  for  which  a special  tax  is  imposed  by  Sections 
1000,  1001,  or  1002  (par.  515-543 ),  without  having  paid  the 
special  tax  therein  provided,  shall,  besides  being  liable  for 
the  payment  of  such  special  tax,  be  subject  to  a penalty  of  not 
more  than  $1,000  or  to  imprisonment  for  not  more  than  one 
year,  or  both. 

Sec.  1006.  That  Section  1 of  the  Act  of  Congress  ap- 
proved December  17,  1914,  is  hereby  amended  to  read  as 
follows : 

“Sec.  1.  That  on  or  before  July  1,  of  each  year  every 
person  who  imports,  manufactures,  produces,  compounds,  sells, 
deals  in,  dispenses,  or  gives  away  opium  or  coca  leaves,  or 
any  compound  manufacture,  salt,  derivative,  or  preparation 
thereof,  shall  register  with  the  collector  of  internal  revenue  of  the  district  his  name 
or  style,  place  of  business  and  place  or  places  where  such  business  is  to  be  carried 
on,  and  pay  the  special  tax  hereinafter  provided; 

553.  “Every  person  who  on  January  1,  1919,  is  engaged  in  any  of  the  activities 
above  enumerated,  or  who  between  such  date  and  the  passage  of  this  Act  first  engages 
in  any  of  such  activities,  shall  within  30  days  after  the  passage  of  this  Act  make 
like  registration,  and  shall  pay  the  proportionate  part  of  the  tax  for  the  period  ending 
June  30,  1919;  and 

554.  “Every  person  who  first  engages  in  any  of  such  activities  after  the  passage 
of  this  Act  shall  immediately  make  like  registration  and  pay  the  proportionate  part 
of  the  tax  for  the  period  ending  on  the  following  June  30th; 

“Importers,  manufacturers,  producers,  or  compounders, 
$24  per  annum ; wholesale  dealers,  $12  per  annum ; retail 
dealers,  $6  per  annum;  physicians,  dentists,  veterinary  sur- 
geons, and  other  practitioners  lawfully  entitled  to  distribute, 
dispense,  give  away,  or  administer  any  of  the  aforesaid  drugs  to  patients  upon  whom 
they  in  the  course  of  their  professional  practice  are  in  attendance,  shall  pay  $3 
per  annum. 

556.  “Every  person  who  imports,  manufactures,  compounds,  or  otherwise  produces 
for  sale  or  distribution  any  of  the  aforesaid  drugs  shall  be  deemed  to  be  an  importer, 
manufacturer,  or  producer. 


550. 

Penalty  for  carry- 
ing on  business  with- 
o u t paying  special 
tax. 


551. 

Harrison  Narcotic 
Act  amended. 

552. 

Registration 

required. 


555. 

Amount  of  annual 
special  taxes. 


73 


557.  “Every  person  who  sells  or  offers  for  sale  any  of  said  drugs  in  the  original 
stamped  packages,  as  hereinafter  provided,  shall  be  deemed  a wholesale  dealer. 

558.  “Every  person  who  sells  or  dispenses  from  original  stamped  packages,  as 
hereinafter  provided,  shall  be  deemed  a retail  dealer:  Provided,  That  the  office,  or 
if  none,  the  residence,  of  any  person  shall  be  considered  for  the  purpose  of  this  Act 
his  place  of  business ; but  no  employee  of  any  person  who  has  registered  and  paid 
special  tax  as  herein  required,  acting  within  the  scope  of  his  employment,  shall  be 
required  to  register  and  pay  special  tax  provided  by  this  section : Provided  further , 
That  officials  of  the  United  States,  Territorial,  District  of  Columbia,  or  insular 
possessions,  State  or  municipal  governments,  who  in  the  exercise  of  their  official 
duties  engage  in  any  of  the  business  herein  described,  shall  not  be  required  to  register, 
nor  pay  special  tax,  nor  stamp  the  aforesaid  drugs  as  hereinafter  prescribed,  but 
their  right  to  this  exemption  shall  be  evidenced  in  such  manner  as  the  Commissioner 
of  Internal  Revenue,  with  the  approval  of  the  Secretary  of  the  Treasury,  may  by 
regulations  prescribe. 

“It  shall  be  unlawful  for  any  person,  required  to  register 
under  the  provisions  of  this  Act  to  import,  manufacture, 
produce,  compound,  sell,  deal  in,  dispense,  distribute,  admin- 
ister, or  give  away  any  of  the  aforesaid  drugs  without  having 
registered  and  paid  the  special  tax  as  imposed  by  this  section. 
560.  “That  the  word  ‘person’  as  used  in  this  Act  shall  be  construed  to  mean  and 

include  a partnership,  association,  company,  or  corporation,  as  well  as  a natural 
person;  and  all  provisions  of  existing  law  relating  to  special  taxes,  as  far  as 
necessary,  are  hereby  extended  and  made  applicable  to  this  section. 

“That  there  shall  be  levied,  assessed,  collected,  and  paid 


559. 

Unlawful  to  handle 
drugs  without  regis- 
tering and  paying 
tax. 


561. 


Tax 


upon  opium,  coca  leaves,  any  compound,  salt,  derivative,  or 


coca  leaves  etc  ’ PreParati°n  thereof,  produced  in  or  imported  into  the  United 
’ * States,  and  sold,  or  removed  for  consumption  or  sale,  an 

internal-revenue  tax  at  the  rate  of  1 cent  per  ounce,  and  any  fraction  of  an  ounce  in 
a package  shall  be  taxed  as  an  ounce,  such  tax  to  be  paid  by  the  importer,  manu- 
facturer, producer,  or  compounder  thereof,  and  to  be  represented  by  appropriate 
stamps,  to  be  provided  by  the  Commissioner  of  Internal  Revenue,  with  the  approval 
of  the  Secretary  of  the  Treasury;  and  the  stamps  herein  provided  shall  be  so  affixed 
to  the  bottle  or  other  container  as  to  securely  seal  the  stopper,  covering,  or  wrapper 
thereof. 


562.  “The  tax  imposed  by  this  section  shall  be  in  addition  to  any  import  duty 
imposed  on  the  aforesaid  drugs. 

“It  shall  be  unlawful  for  any  person  to  purchase,  sell, 
dispense,  or  distribute  any  of  the  aforesaid  drugs  except  in 
the  original  stamped  package  or  from  the  original  stamped 
package ; and  the  absence  of  appropriate  tax-paid  stamps  from 
any  of  the  aforesaid  drugs  shall  be  prima  facie  evidence  of 
a violation  of  this  section  by  the  person  in  whose  posession 
same  may  be  found ; and  the  possession  of  any  original 
stamped  package  containing  any  of  the  aforesaid  drugs  by  any  person  who  has  not 
registered  and  paid  special  taxes  as  required  by  this  section  shall  be  prima  facie 
evidence  of  liability  to  such  special  tax:  Provided , That  the  provisions  of  this 
paragraph  shall  not  apply  to  any  person  having  in  his  or  her  possession  any  of  the 
aforesaid  drugs  which  have  been  obtained  from  a registered  dealer  in  pursuance  of 
a prescription,  written  for  legitimate  medical  uses,  issued  by  a physician,  dentist, 
veterinary  surgeon,  or  other  practitioner  registered  under  this  Act ; and  where  the 
bottle  or  other  container  in  which  such  drug  may  be  put  up  by  the  dealer  upon 
said  prescription  bears  the  name  and  registry  number  of  the  druggist,  serial  number 
of  prescription,  name  and  address  of  the  patient,  and  name,  address,  and  registry 
number  of  the  person  writing  said  prescription;  or  to  the  dispensing,  or  administration, 
or  giving  away  of  any  of  the  aforesaid  drugs  to  a patient  by  a registered  physician, 
dentist,  veterinary  surgeon,  or  other  practitioner  in  the  course  of  his  professional 
practice,  and  where  said  drugs  are  dispensed  or  administered  to  the  patient  for 
legitimate  medical  purposes,  and  the  record  kept  as  required  by  this  Act  of  the 
drugs  so  dispensed,  administered,  distributed,  or  given  away. 

564.  “And  all  the  provisions  of  existing  laws  relating  to  the 

Stamp  provisions  engraving,  issuance,  sale,  accountability,  cancellation,  and 
applicable.  destruction  of  tax-paid  stamps  provided  for  in  the  internal- 

revenue  laws  are,  in  so  far  as  necessary,  hereby  extended 
and  made  to  apply  to  stamps  provided  by  this  section. 

74 


563. 

Unlawful  to  pur- 
chase, sell  or  dis- 
tribute except  in 
original  stamped 
package. 


565.  “That  all  unstamped  packages  of  the  aforesaid  drugs 

Unstamped  pack-  found  in  the  possession  of  any  person,  except  as  herein  pro- 
ages subject  to  seiz-  vided,  shall  be  subject  to  seizure  and  forfeiture,  and  all  the 
ure.  provisions  of  existing  internal-revenue  laws  relating  to 

searches,  seizures,  and  forfeitures  of  unstamped  articles  are 
hereby  extended  to  and  made  to  apply  to  the  articles  taxed  under  this  Act  and  the 
persons  upon  whom  these  taxes  are  imposed. 

egg  “Importers,  manufacturers,  and  wholesale  dealers  shall 

Records  and  re-  keep  suc^  books  an<*  records  and  render  such  monthly  returns 

turns  ” in  relation  to  the  transactions  in  the  aforesaid  drugs  as  the 

Commissioner  of  Internal  Revenue,  with  the  approval  of  the 
Secretary  of  the  Treasury,  may  by  regulations  require. 

567.  “The  Commissioner  of  Internal  Revenue,  with  the  approval  of  the  Secretary 
of  the  Treasury,  shall  make  all  needful  rules  and  regulations  for  carrying  the 
provisions  of  this  Act  into  effect.” 

568.  Sec.  1007.  That  Section  6 of  such  Act  of  December  17,  1914,  is  hereby 
amended  to  read  as  follows : 

56q  “Sec.  6.  That  the  provisions  of  this  Act  shall  not  be 

When  not  annli  construed  to  apply  to  the  manufacture,  sale,  distribution, 

i I pp  " giving  away,  dispensing,  or  possession  of  preparations  and 

remedies  which  do  not  contain  more  than  two  grains  of 
opium,  or  more  than  one-fourth  of  a grain  of  morphine,  or  more  than  one-eighth  of 
a grain  of  heroin,  or  more  than  one  grain  of  codeine,  or  any  salt  or  derivative  of  any 
of  them  in  one  fluid  ounce,  or,  if  a solid  or  semi-solid  preparation,  in  one  avoirdupois 
ounce;  or  to  liniments,  ointments,  or  other  preparations  which  are  prepared  for 
external  use  only,  except  liniments,  ointments,  and  other  preparations  which  contain 
cocaine  or  any  of  its  salts  or  alpha  or  beta  eucaine  or  any  of  their  salts  or  any 
synthetic  substitute  for  them : Provided,  That  such  remedies  and  preparations  are 
manufactured,  sold,  distributed,  given  away,  dispensed  or  possessed  as  medicines  and 
not  for  the  purpose  of  evading  the  intentions  and  provisions  of  this  Act:  Provided 
further,  That  any  manufacturer,  producer,  compounder,  or  vendor  (including  dispensing 
physicians)  of  the  preparations  and  remedies  mentioned  in  this  section  shall  keep 
a record  of  all  sales,  exchanges,  or  gifts  of  such  preparations  and  remedies  in  such 
manner  as  the  Commissioner  of  Internal  Revenue,  with  the  approval  of  the  Secretary 
of  the  Treasury,  shall  direct.  Such  record  shall  be  preserved  for  a period  of  two 
years  in  such  a way  as  to  be  readily  accessible  to  inspection  by  any  officer,  agent,  or 
employee  of  the  Treasury  Department  duly  authorized  for  that  purpose,  and  the  State, 
Territorial,  District,  Municipal,  and  Insular  offices  named  in  Section  5 of  this  Act, 
and  every  such  person  so  possessing  or  disposing  of  such  preparations  and  remedies 
shall  register  as  required  in  Section  1 of  this  Act  and,  if  he  is  not  paying  a tax 
under  this  Act,  he  shall  pay  a special  tax  of  $1  for  each  year,  or  fractional  part 
thereof,  in  which  he  is  engaged  in  such  occupation,  to  the  Collector  of  Internal 
Revenue  of  the  district  in  which  he  carries  on  such  occupation  as  provided  in  this 
Act.  The  provisions  of  this  Act  as  amended  shall  not  apply  to  decocainized  coca 
leaves  or  preparations  made  therefrom,  or  to  other  preparations  of  coca  leaves  which 
do  not  contain  cocaine.” 

Sec.  1008.  That  all  opium,  its  salts,  derivatives,  and 
compounds,  and  coca  leaves,  salts,  derivatives,  and  compounds 
thereof,  which  may  now  be  under  seizure  or  which  may 
hereafter  be  seized  by  the  United  States  "Government  from 
any  person  or  persons  charged  with  any  violation  of  the  Act 
of  October  1,  1890,  as  amended  by  the  Acts  of  March  3,  1897, 
February  9,  1909,  and  January  17,  1914,  or  the  Act  of  December  17,  1914,  shall  upon 
conviction  of  the  person  or  persons  from  whom  seized  be  confiscated  by  and  forfeited 
to  the  United  States;  and  the  Secretary  is  hereby  authorized  to  deliver  for  medical 
or  scientific  purposes  to  any  department,  bureau,  or  other  agency  of  the  United  States 
Government,  upon  proper  application  therefor  under  such  regulation  as  may  be 
prescribed  by  the  Commissioner,  with  the  approval  of  the  Secretary,  any  of  the 
drugs  so  seized,  confiscated,  and  forfeited  to  the  United  States. 

571.  The  provisions  of  this  section  shall  also  apply  to  any  of  the  aforesaid  drugs 
seized  or  coming  into  the  possession  of  the  United  States  in  the  enforcement  of 
any  of  the  above-mentioned  Acts  where  the  owner  or  owners  thereof  are  unknown. 
None  of  the  aforesaid  drugs  coming  into  possession  of  the  United  States  under  the 
operation  of  said  Acts,  or  the  provisions  of  this  section,  shall  be  destroyed  without 

75 


570. 

Seized  drugs  deliv- 
ered for  medical  or 
scentific  purposes  to 
United  States. 


certification  by  a committee  appointed  by  the  Commissioner,  with  the  approval  of  the 
Secretary,  that  they  are  of  no  value  for  medical  or  scientific  purposes. 


572. 

Repeal  provisions. 


Sec.  1009.  That  the  Act  approved  October  22,  1914, 
entitled  “An  Act  to  increase  the  internal  revenue,  and  for 
other  purposes,”  and  the  joint  resolution  approved  December 
17,  1915,  entitled  “Joint  resolution  extending  the  provisions  of  the  Act  entitled  ‘An 
Act  to  increase  the  internal  revenue,  and  for  other  purposes/  approved  October 
twenty-second,  nineteen  hundred  and  fourteen,  to  December  thirty-first,  nineteen 
hundred  and  sixteen,”  are  hereby  repealed,  except  that  the  provisions  of  such  Act 
shall  remain  in  force  for  the  assessment  and  collection  of  all  special  taxes  imposed 
by  Sections  3 and  4 thereof,  or  by  such  sections  as  extended  by  such  joint  resolution, 
for  any  year  or  part  thereof  ending  prior  to  January  1,  1917,  and  of  all  other  taxes 
imposed  by  such  Act,  or  by  such  Act  as  so  extended,  accrued  prior  to  September 
8,  1916,  and  for  the  imposition  and  collection  of  all  penalties  or  forfeitures  which  have 
accrued  or  may  accrue  in  relation  to  any  of  such  taxes. 


TITLE  XI.— STAMP  TAXES 


Sec.  1100.  That  on  and  after  April  1,  1919,  there  shall  be 
levied,  collected,  and  paid,  for  and  in  respect  of  the  several 
bonds,  debentures,  or  certificates  of  stock  and  of  indebtedness, 
and  other  documents,  instruments,  matters,  and  things  men- 
tioned and  described  in  Schedule  A of  this  title  {par.  591-610), 
or  for  or  in  respect  of  the  vellum,  parchment,  or  paper  upon 
which  such  instruments,  matters,  or  things,  or  any  of  them,  are  written  or  printed, 
by  any  person  who  makes,  signs,  issues,  sells,  removes,  consigns  or  ships  the  same, 
or  for  whose  use  or  benefit  the  same  are  made,  signed,  issued,  sold,  removed,  con- 
signed, or  shipped,  the  several  taxes  specified  in  such  schedule.  The  taxes  imposed  by 
this  section  shall,  in  the  case  of  any  article  upon  which  a corresponding  stamp  tax  is  now 
imposed  by  law,  be  in  lieu  of  such  tax.* 


573. 

Effective  April  1, 
1919,  stamp  taxes  in 
lieu  of  corresponding 
taxes  in  Act  of  1917. 


Sec.  1101.  That  there  shall  not  be  taxed  under  this  title 
'■c;  ..  any  bond,  note,  or  other  instrument,  issued  by  the  United 

P 0 * States,  or  by  any  foreign  Government,  or  by  any  State, 

Territory,  or  the  District  of  Columbia,  or  local  subdivision  thereof,  or  municipal  or 
other  corporation  exercising  the  taxing  power ; or  any  bond  of  indemnity  required 
to  be  filed  by  any  person  to  secure  payment  of  any  pension,  allowance,  allotment, 
relief,  or  insurance  by  the  United  States ; or  stocks  and  bonds  issued  by  co-operative 
building  and  loan  associations  which  are  organized  and  operated  exclusively  for 
the  benefit  of  their  members  and  make  loans  only  to  their  shareholders,  or  by  mutual 
ditch  or  irrigating  companies. 


Sec.  1102.  That  whoever — 


575.  (a)  Makes,  signs,  issues,  or  accepts,  or  causes  to  be 
Penalty  for  non-  made,  signed,  issued,  or  accepted,  any  instrument,  document, 

use  and  non-cancella-  or  paper  of  any  kind  or  description  whatsoever  without  the 
tion  of  stamps.  full  amount  of  tax  thereon  being  duly  paid : 

576.  (b)  Consigns  or  ships  or  causes  to  be  consigned  or  shipped,  by  parcel  post 
any  parcel,  package,  or  article  without  the  full  amount  of  tax  being  duly  paid ; 

577.  (c)  Manufactures  or  imports  and  sells,  or  offers  for  sale,  or  causes  to  be 
manufactured  or  imported  and  sold,  or  offered  for  sale,  any  playing  cards,  package, 
or  other  article  without  the  full  amount  of  tax  being  duly  paid ; 

578.  (d)  Makes  use  of  any  adhesive  stamp  to  denote  any  tax  imposed  by  this 
title  without  canceling  or  obliterating  such  stamp  as  prescribed  in  Section  1104 
(Par.  585). 

579.  Is  guilty  of  a misdemeanor  and  upon  conviction  thereof  shall  pay  a fine  of 
not  more  than  $100  for  each  offense. 


Sec.  1103.  That  whoever — 


580. 

Fraudulent  and 
willful  misuse  of 
stamps. 


(a)  Fraudulently  cuts,  tears,  or  removes  from  any  vellum, 
parchment,  paper,  instrument,  writing,  package,  or  article, 
upon  which  any  tax  is  imposed  by  this  title,  any  adhesive 
stamp  or  the  impression  of  any  stamp,  die,  plate,  or  other 
article,  provided,  made,  or  used  in  pursuance  of  this  title; 


*Rates  are  the  same  as  this  Act  with  the  exception  of  tax  on  playing  cards  is  7c;  and  tax 
under  par.  609  was  not  applicable. 


76 


581.  (b)  Fraudulently  uses,  joins,  fixes,  or  places  to,  with,  or  upon  any  vellum, 

parchment,  paper,  instrument,  writing,  package,  or  article,  upon  which  any  tax  is 
imposed  by  this  title,  (1)  any  adhesive  stamp,  or  the  impression  of  any  stamp,  die, 
plate,  or  other  article,  which  has  been  cut,  torn,  or  removed  from  any  other  vellum, 
parchment,  paper,  instrument,  writing,  package  or  article,  upon  which  any  tax  is 
imposed  by  this  title;  or  (2)  any  adhesive  stamp  or  the  impression  of  any  stamp, 
die,  plate,  or  other  article  of  insufficient  value;  or  (3)  any  forged  or  counterfeit 
stamp,  or  the  impression  of  any  forged  or  counterfeited  stamp,  die,  plate,  or  other 
article ; . 


582.  (c)  Willfully  removes,  or  alters  the  cancellation,  or  defacing  marks  of,  or 
otherwise  prepares,  any  adhesive  stamp,  with  intent  to  use,  or  cause  the  same  to 
be  used,  after  it  has  been  already  used,  or  knowingly  or  willfully  buys,  sells,  offers 
for  sale,  or  gives  away,  any  such  washed  or  restored  stamp  to  any  person  for  use, 
or  knowingly  uses  the  same; 

583.  (d)  Knowingly  and  without  lawful  excuse  (the  burden  of  proof  of  such 
excuse  being  on  the  accused)  has  in  possession  any  washed,  restored,  or  altered 
stamp,  which  has  been  removed  from  any  vellum,  parchment,  paper,  instrument, 
writing,  package,  or  article; 


Is  guilty  of  a misdemeanor,  and  upon  conviction  shall  be 
Penalties  and  ar-  Pushed  by  a fine  of  not  more  than  $1,000,  or  by  imprison- 
ticles  forfeited  " ment  f°r  not  more  than  five  years,  or  both,  and  any  such 

reused,  canceled,  or  counterfeit  stamp  and  the  vellum,  parch- 
ment, document,  paper,  package,  or  article  upon  which  it  is  placed  or  impressed 
shall  be  forfeited  to  the  United  States. 


586. 

Commissioner  to 
prepare  and  distrib- 
ute suitable  stamps. 


egS  Sec.  1104.  That  whenever  an  adhesive  stamp  is  used  for 

rannpllatinn  f denoting  any  tax  imposed  by  this  title,  except  as  hereinafter 
stamos  provided,  the  person  using  or  affixing  the  same  shall  write  or 

p ' stamp  or  cause  to  be  written  or  stamped  thereupon  the  initials 

of  his  or  its  name  and  the  date  upon  which  the  same  is  attached  or  used,  so  that  the 
same  may  not  again  be  used : Provided,  That  the  Commissioner  may  prescribe  such 
other  method  for  the  cancellation  of  such  stamps  as  he  may  deem  expedient. 

Sec.  1105.  (a)  That  the  Commissioner  shall  cause  to  be 

prepared  and  distributed  for  the  payment  of  the  taxes  pre- 
scribed in  this  title  suitable  stamps  denoting  the  tax  on  the 
document,  articles,  or  thing  to  which  the  same  may  be  affixed, 
and  shall  prescribe  such  method  for  the  affixing  of  said 
stamps  in  substitution  for  or  in  addition  to  the  method  provided  in  this  title,  as  he 
may  deem  expedient. 

587.  (b)  The  Commissioner,  with  the  approval  of  the  Secretary,  is  authorized  to 
procure  any  of  the  stamps  provided  for  in  this  title  by  contract  whenever  such 
stamps  can  not  be  speedily  prepared  by  the  Bureau  of  Engraving  and  Printing;  but 
this  authority  shall  expire  on  January  1,  1920,  except  as  to  imprinted  stamps  furnished 
under  contract,  authorized  by  the  Commissioner. 

588.  (c)  All  internal-revenue  laws  relating  to  the  assessment  and  collection  of 
taxes  are  hereby  extended  to  and  made  a part  of  this  title,  so  far  as  applicable,  for 
the  purpose  of  collecting  stamp  taxes  omitted  through  mistake  or  fraud  from  any 
instrument,  document,  paper,  writing,  parcel,  package,  or  article  named  herein. 

egg  Sec.  1106.  That  the  Commissioner  shall  furnish  to  the 

Pncfmactpr  p.„prai  Postmaster  General  without  prepayment  a suitable  quantity 
ci-amr>c  of  adhesive  stamps  to  be  distributed  to  and  kept  on  sale  by 

p * the  various  postmasters  in  the  United  States.  The  Post- 

master General  may  require  each  such  postmaster  to  give  additional  or  increased  bond 
as  postmaster  for  the  value  of  the  stamps  so  furnished,  and  each  such  postmaster 
shall  deposit  the  receipts  from  the  sale  of  such  stamps  to  the  credit  of  and  render 
accounts  to  the  Postmaster  General  at  such  times  and  in  such  form  as  he  may  by 
regulations  prescribe.  The  Postmaster  General  shall  at  least  once  monthly  transfer 
all  collections  from  this  source  to  the  Treasury  as  internal-revenue  collections. 

,gQ  Sec.  1107.  That  the  collectors  of  the  several  districts 

Q’tomncfnmiciipH  shall  furnish  without  prepayment  to  any  assistant  treasurer 
or  or  designated  depositary  of  the  United  States  located  in  their 
/lAciVnafpri  respective  collection  districts  a suitable  quantity  of  adhesive 

taries  of  U S P " stamPs  f°r  sa^e*.  In  such  cases  the  collector  may  require  a 
bond,  with  sufficient  sureties,  to  an  amount  equal  to  the  value 
of  the  adhesive  stamps  so  furnished,  conditioned  for  the  faithful  return,  whenever  so 


77 


591. 

Bonds  of  indebted- 
ness. 


required,  of  all  quantities  or  amounts  undisposed  of,  and  for  the  payment  monthly 
of  all  quantities  or  amounts  sold  or  not  remaining  on  hand.  The  Secretary  may 
from  time  to  time  make  such  regulations  as  he  may  find  necessary  to  insure  the 
safekeeping  or  prevent  the  illegal  use  of  all  such  adhesive  stamps. 

SCHEDULE  A.— STAMP  TAXES 

(1)  Bonds  of  indebtedness:  On  all  bonds,  debentures, 
or  certificates  of  indebtedness  issued  by  any  person,  and  all 
instruments,  however  termed,  issued  by  any  corporation  with 
interest  coupons  or  in  registered  form,  known  generally  as 
corporate  securities,  on  each  $100  of  face  value  or  fraction  thereof,  5 cents : Provided , 
That  every  renewal  of  the  foregoing  shall  be  taxed  as  a new  issue : Provided  further, 
That  when  a bond  conditioned  for  the  repayment  or  payment  of  money  is  given  in  a 
penal  sum  greater  than  the  debt  secured,  the  tax  shall  be  based  upon  the  amount 
secured. 

2Q2  (2)  Bonds,  indemnity  and  surety : On  all  bonds  executed 

Tnrl#»rrmifv  nnd  cur  f°r  indemnifying  any  person  who  shall  have  become  bound 
ety  bonds  ” or  engaged  as  surety,  and  on  all  bonds  executed  for  the  due 

y * execution  or  performance  of  any  contract,  obligation  or 

requirement,  or  the  duties  of  any  office  or  position,  and  to  account  for  money  received 
by  virtue  thereof,  and  on  all  policies  of  guaranty  and  fidelity  insurance,  including 
policies  guaranteeing  titles  to  real  estate  and  mortgage  guarantee  policies,  and  on  all 
other  bonds  of  any  description,  made,  issued,  or  executed,  not  otherwise  provided 
for  in  this  schedule,  except  such  as  may  be  required  in  legal  proceedings,  50  cents : 
Provided , That  where  a premium  is  charged  for  the  issuance,  execution,  renewal  or 
continuance  of  such  bond  the  tax  shall  be  1 cent  on  each  dollar  or  fractional  part 
thereof  of  the  premium  charged:  Provided  further,  That  policies  of  reinsurance  shall 
be  exempt  from  the  tax  imposed  by  this  subdivision. 

ego  (3)  Capital  stock,  issue:  On  each  original  issue,  whether 

r’anital  on  organization  or  reorganization,  of  certificates  of  stock,  or 

p ' of  profits,  or  of  interest  in  property  or  accumulations,  by  any 

corporation,  on  each  $100  of  face  value  or  fraction  thereof,  5 cents : Provided,  That 
where  a certificate  is  issued  without  face  value,  the  tax  shall  be  5 cents  per  share, 
unless  the  actual  value  is  in  excess  of  $100  per  share,  in  which  case  the  tax  shall  be 
5 cents  on  each  $100  of  actual  value  or  fraction  thereof. 

594.  The  stamps  representing  the  tax  imposed  by  this  subdivision  shall  be  attached 
to  the  stock  books  and  not  to  the  certificates  issued. 

(4)  Capital  stock,  sales  or  transfers:  On  all  sales,  or 
<5*  i rw  fr9ncfprc  agreements  to  sell,  or  memoranda  of  sales  or  deliveries  of, 
of  capital  stock  or  trans^ers  °f  legal  title  to  shares  or  certificates  of  stock 

p * or  of  profits  or  of  interest  in  property  or  accumulations  in 

any  corporation,  or  to  rights  to  subscribe  for  or  to  receive  such  shares  or  certificates, 
whether  made  upon  or  shown  by  the  books  of  the  corporation,  or  by  any  assignment 
in  blank,  or  by  any  delivery,  or  by  any  paper  or  agreement  or  memorandum  or  other 
evidence  of  transfer  or  sale,  whether  entitling  the  holder  in  any  manner  to  the  benefit 
of  such  stock,  interest,  or  rights,  or  not,  on  each  $100  of  face  value  or  fraction 
thereof,  2 cents,  and  where  such  shares  are  without  par  or  face  value,  the  tax  shall 
be  2 cents  on  the  transfer  or  sale  or  agreement  to  sell  on  each  share,  unless  the 
actual  value  thereof  is  in  excess  of  $100  per  share,  in  which  case  the  tax  shall  be 
2 cents  on  each  $100  of  actual  value  or  fraction  thereof : Provided,  That  it  is  not 
intended  by  this  title  to  impose  a tax  upon  an  agreement  evidencing  a deposit  of 
certificates  as  collateral  security  for  money  loaned  thereon,  which  certificates  are  not 
actually  sold,  nor  upon  the  delivery  or  transfer  for  such  purpose  of  certificates  so 
deposited : Provided  further.  That  the  tax  shall  not  be  imposed  upon  deliveries  or 
transfers  to  a broker  for  sale,  nor  upon  deliveries  or  transfers  by  a broker  to  a 
customer  for  whom  and  upon  whose  order  he  has  purchased  same,  but  such  deliveries 
or  transfers  shall  be  accompanied  by  a certificate  setting  forth  the  facts : Provided 
further,  That  in  case  of  sale  where  the  evidence  of  transfer  is  shown  only  by  the 
books  of  the  corporation  the  stamp  shall  be  placed  upon  such  books ; and  where  the 
change  of  ownership  is  by  transfer  of  the  certificate  the  stamp  shall  be  placed  upon 
the  certificate;  and  in  cases  of  agreement  to  sell  or  where  the  transfer  is  by  delivery 
of  the  certificate  assigned  in  blank  there  shall  be  made  and  delivered  by  the  seller 
to  the  buyer  a bill  or  memorandum  of  such  sale,  to  which  the  stamp  shall  be  affixed ; 
and  every  bill  or  memorandum  of  sale  or  agreement  to  sell  before  mentioned  shall 
show  the  date  thereof,  the  name  of  the  seller,  the  amount  of  the  sale,  and  the 

- 78 


matter  or  thing  to  which  it  refers.  Any  person  liable  to  pay  the  tax  as  herein 
provided,  or  anyone  who  acts  in  the  matter  as  agent  or  broker  for  such  person,  who 
makes  any  such  sale,  or  who  in  pursuance  of  any  such  sale  delivers  any  certificate 
or  evidence  of  the  sale  of  any  stock,  interest  or  right,  or  bill  or  memorandum  thereof, 
as  herein  required,  without  having  the  proper  stamps  affixed  thereto  with  intent 
to  evade  the  foregoing  provisions,  shall  be  deemed  guilty  of  a misdemeanor,  and 
upon  conviction  thereof  shall  pay  a fine  of  not  exceeding  $1,000,  or  be  imprisoned 
not  more  than  six  months,  or  both. 


596. 

Sales  of  produce  on 
exchange  for  future 
delivery. 


(5)  Produce,  sales  of,  on  exchange:  Upon  each  sale, 

agreement  of  sale,  or  agreement  to  sell  (not  including  so- 
called  transferred  or  scratch  sales),  any  products  or  mer- 
chandise at,  or  under  the  rules  or  usages  of,  any  exchange, 

or  board  of  trade,  or  other  similar  place  for  future  delivery, 

for  each  $100  in  value  of  the  merchandise  covered  by  said  sale  or  agreement  of 
sale  or  agreement  to  sell,  2 cents,  and  for  each  additional  $100  or  fractional  part 
thereof  in  excess  of  $100,  2 cents : Provided,  That  on  every  sale  or  agreement  of  sale 
or  agreement  to  sell  as  aforesaid  there  shall  be  made  and  delivered  by  the  seller  to  the 
buyer  a bill,  memorandum,  agreement,  or  other  evidence  of  such  sale,  agreement  of 
sale,  or  agreement  to  sell,  to  which  there  shall  be  affixed  a lawful  stamp  or  stamps 
in  value  equal  to  the  amount  of  the  tax  on  such  sale : Provided  further,  That  sellers 
of  commodities  described  herein,  having  paid  the  tax  provided  by  this  subdivision, 
may  transfer  such  contracts  to  a clearing-house  corporation  or  association,  and 
such  transfer  shall  not  be  deemed  to  be  a sale,  or  agreement  of  sale,  or  an  agreement 
to  sell  within  the  provisions  of  this  Act,  provided  that  such  transfer  shall  not  vest 
any  beneficial  interest  in  such  clearing-house  association  but  shall  be  made  for  the 

sole  purpose  of  enabling  such  clearing-house  association  to  adjust  and  balance  the 

accounts  of  the  members  of  such  clearing-house  association  on  their  several  contracts. 
Every  such  bill,  memorandum,  or  other  evidence  of  sale  or  agreement  to  sell  shall 
show  the  date  thereof,  the  name  of  the  seller,  the  amount  of  the  sale,  and  the  matter 
or  thing  to  which  it  refers ; and  any  person  liable  to  pay  the  tax  as  herein  provided, 
or  anyone  who  acts  in  the  matter  as  agent  or  broker  for  such  person,  who  makes  any 
such  sale  or  agreement  of  sale,  or  agreement  to  sell,  or  who,  in  pursuance  of  any 
such  sale,  agreement  of  sale,  or  agreement  to  sell,  delivers  any  such  products  or 
merchandise  without  a bill,  memorandum,  or  other  evidence  thereof  as  herein  required, 
or  who  delivers  such  bill,  memorandum,  or  other  evidence  of  sale,  or  agreement  to 
sell,  without  having  the  proper  stamps  affixed  thereto,  with  intent  to  evade  the 
foregoing  provisions,  shall  be  deemed  guilty  of  a misdemeanor,  and  upon  conviction 
thereof  shall  pay  a fine  of  not  exceeding  $1,000  or  be  imprisoned  not  more  than  six 
months  or  both. 

No  bill,  memorandum,  agreement,  or  other  evidence  of 
such  sale,  or  agreement  of  sale,  or  agreement  to  sell,  in  case 
of  cash  sales  of  products  or  merchandise  for  immediate  or 
prompt  delivery  which  in  good  faith  are  actually  intended  to 
be  delivered  shall  be  subject  to  this  tax. 

(6)  Drafts  or  checks  (payable  otherwise  than  at  sight 
or  on  demand)  upon  their  acceptance  or  delivery  with  the 
United  States  whichever  is  prior,  promissory  notes,  except 
bank  notes  issued  for  circulation,  and  for  each  renewal  of 

2 cents;  and  for  each  additional  $100  or 


597. 

Cash  sales  for 
prompt  delivery  not 
taxed. 


598. 

Drafts,  checks  and 
promissory  notes. 

the  same,  for  a sum  not  exceeding  $100, 
fractional  part  thereof,  2 cents, 
egg  This  subdivision  shall  not  apply  to  a promissory  note 

onnUroKU  secured  by  the  pledge  of  bonds  or  obligations  of  the  United 

* / States  issued  after  April  24,  1917,  or  secured  by  the  pledge 
of  a promissory  note  which  itself  is  secured  by  the  pledge  of  such  bonds  or  obligations : 
Provided,  That  in  either  case  the  par  value  of  such  bonds  or  obligations  shall  be 
not  less  than  the  amount  of  such  note. 


600. 

Conveyances. 


(7)  Conveyances:  Deed,  instrument,  or  writing,  whereby 
any  lands,  tenements,  or  other  realty  sold  shall  be  granted, 
assigned,  transferred,  or  otherwise  conveyed  to,  or  vested  in, 
the  purchaser  or  purchasers,  or  any  other  person  or  persons,  by  his,  her,  or  their 
direction,  when  the  consideration  or  value  of  the  interest  or  property  conveyed, 
exclusive  of  the  value  of  any  lien  or  encumbrance  remaining  thereon  at  the  time 
of  sale,  exceeds  $100  and  does  not  exceed  $500,  50  cents ; and  for  each  additional 
$500  or  fractional  part  thereof,  50  cents.  This  subdivision  shall  not  apply  to  any 
instrument  or  writing  given  to  secure  a debt. 

79 


601. 

Entry  of  goods  at 
customhouse. 

602. 

Entry  for  with- 
drawal. 


(8)  Entry  of  any  goods,  wares,  or  merchandise  at  any 
customhouse,  either  for  consumption  or  warehousing,  not 
exceeding  $100  in  value,  25  cents ; exceeding  $100  and  not 
exceeding  $500  in  value,  50  cents;  exceeding  $500  in  value,  $1. 

(9)  Entry  for  the  withdrawal  of  any  goods  or  merchan- 
dise from  customs  bonded  warehouse,  50  cents. 


(10)  Passage  ticket,  one  way  or  round  trip,  for  each 
T?  man  naccaap  passenger,  sold  or  issued  in  the  United  States  for  passage 

tickets  ^ ^ § by  any  vessel  to  a port  or  place  not  in  the  United  States, 

' Canada,  or  Mexico,  if  costing  not  exceeding  $30,  $1 ; costing 

more  than  $30  and  not  exceeding  $60,  $3 ; costing  more  than  $60,  $5.  This  sub- 
division shall  not  apply  to  passage  tickets  costing  $10  or  less. 

(11)  Proxy  for  voting  at  any  election  for  officers,  or 

0 p . meeting  for  the  transaction  of  business,  of  any  corporation, 

roxies.  except  religious,  educational,  charitable,  fraternal,  or  literary 

societies,  or  public  cemeteries,  10  cents. 

60-  (12)  Power  of  attorney  granting  authority  to  do  or  per- 

p r form  some  act  for  or  in  behalf  of  the  grantor,  which 

ow  ° 0 y*  authority  is  not  otherwise  vested  in  the  grantee,  25  cents. 

This  subdivision  shall  not  apply  to  any  papers  necessary  to  be  used  for  the  collection 
of  claims  from  the  United  States  or  from  any  State  for  pensions,  back  pay,  bounty, 
or  for  property  lost  in  the  military  or  naval  service,  or  to  powers  of  attorney  required 
in  bankruptcy  cases. 


603. 


606. 

Playing  cards. 

tax  of  8 cents  per  pack. 


(13)  Playing  cards:  Upon  every  pack  of  playing  cards 
containing  not  more  than  fifty-four  cards,  manufactured  or 
imported,  and  sold,  or  removed  for  consumption  or  sale,  a 


609. 

Policies  or  instru- 
m e n t s of  insurance 
not  signed  or  coun- 
tersigned by  an  of- 
ficer or  agent  of  in- 
surer in  U.  S. 


gQ~  (14)  Parcel-post  packages:  Upon  every  parcel  or  package 

Parcel  cost  oack-  transPorted  from  one  point  in  the  United  States  to  another 
p p " by  parcel  post  on  which  the  postage  amounts  to  25  cents  or 
s ' more,  a tax  of  1 cent  for  each  25  cents  or  fractional  part 

thereof  charged  for  such  transportation,  to  be  paid  by  the  consignor. 

608.  No  such  parcel  or  package  shall  be  transported  until  a stamp  or  stamps 
representing  the  tax  due  shall  have  been  affixed  thereto. 

(15)  On  each  policy  of  insurance,  or  certificate,  binder, 
covering  note,  memorandum,  cablegram,  letter,  or  other  in- 
strument by  whatever  name  called  whereby  insurance  is  made 
or  renewed  upon  property  within  the  United  States  (including 
rents  and  profits)  against  peril  by  sea  or  on  inland  waters  or 
in  transit  on  land  (including  trans-shipments  and  storage  at 
terminal  or  way  points)  or  by  fire,  lightning,  tornado,  wind- 
storm, bombardment,  invasion,  insurrection  or  riot,  issued  to 
or  for  or  in  the  name  of  a domestic  corporation  or  partnership  or  an  individual 
resident  of  the  United  States  by  any  foreign  corporation  or  partnership  or  any 
individual  not  a resident  of  the  United  States,  when  such  policy  or  other  instrument 
is  not  signed  or  countersigned  by  an  officer  or  agent  of  the  insurer  in  a State,  Territory, 
or  district  of  the  United  States  within  which  such  insurer  is  authorized  to  do 
business,  a tax  of  3 cents  on  each  dollar,  or  fractional  part  thereof  of  the  premium 
charged : Provided,  That  policies  of  re-insurance  shall  be  exempt  from  the  tax 
imposed  by  this  subdivision. 

g.Q  Any  person  to  or  for  whom  or  in  whose  name  any 

•p*>naifT7  foHurA  such  policy  or  other  instrument  is  issued,  or  any  solicitor  or 
. affiv  broker  acting  for  or  on  behalf  of  such  person  in  the  procure- 

p ' ment  of  any  such  policy  or  other  instrument,  shall  affix  the 

proper  stamps  to  such  policy  or  other  instrument,  and  for  failure  to  affix  such  stamps 
with  intent  to  evade  the  tax  shall,  in  addition  to  other  penalties  provided  therefor, 
pay  a fine  of  double  the  amount  of  the  tax. 


TITLE  XII.— TAX  ON  EMPLOYMENT  OF  CHILD  LABOR 

611.  Sec.  1200.  That  every  person  (other  than  a bona  fide 

Mine  or  quarry  boys’  or  girls’  canning  club  recognized  by  the  Agricultural 

e m p 1 oying  children  Department  of  a State  and  of  the  United  States)  operating 

under  16,  or  mill,  can-  (a)  any  mine  or  quarry  situated  in  the  United  States  in 

80 


nery,  workshop,  fac-  which  children  under  the  age  of  sixteen  years  have  been 
tory  or  manufactur-  employed  or  permitted  to  work  during  any  portion  of  the 
ing  establishment  em-  taxable  year;  or  (b)  any  mill,  cannery,  workshop,  factory,  or 
ploying  children  un-  manufacturing  establishment  situated  in  the  United  States 
der  14.  in  which  children  under  the  age  of  fourteen  years  have  been 

employed  or  permitted  to  work,  or  children  between  the  ages 
of  fourteen  and  sixteen  have  been  employed  or  permitted  to  work  more  than  eight 
hours  in  any  day  or  more  than  six  days  in  any  week,  or  after  the  hour  of  seven 
o’clock  post  meridian,  or  before  the  hour  of  six  o’clock  ante  meridian,  during  any 
portion  of  the  taxable  year,  shall  pay  for  each  taxable  year,  in  addition  to  all  other 
taxes  imposed  by  law,  an  excise  tax  equivalent  to  10  per  centum  of  the  entire  net 
profits  received  or  accrued  for  such  year  from  the  sale  or  disposition  of  the  product 
of  such  mine,  quarry,  mill,  cannery,  workshop,  factory,  or  manufacturing  establishment. 

Sec.  1201.  That  in  computing  net  profits  under  the  pro- 
visions of  this  title,  for  the  purpose  of  the  tax  there  shall  be 
allowed  as  deductions  from  the  gross  amount  received  or 


612. 

Computation  of  net 


profits. 


accrued  for  the  taxable  year  from  the  sale  or  disposition  of 


618. 

Where  person  sells 
products  at  less  than 
fair  market  price. 


such  products  manufactured  within  the  United  States  the  following  items : 

613.  (a)  The  cost  of  raw  materials  entering  into  the  production; 

614.  (b)  Running  expenses,  including  rentals,  cost  of  repairs,  and  maintenance, 
heat,  power,  insurance,  management,  and  a reasonable  allowance  for  salaries  or  other 
compensations  for  personal  services  actually  rendered,  and  for  depreciation ; 

615.  (c)  Interest  paid  within  the  taxable  year  on  debts  or  loans  contracted  to 
meet  the  needs  of  the  business,  and  the  proceeds  of  which  have  been  actually  used 
to  meet  such  needs ; 

616.  (d)  Taxes  of  all  kinds  paid  during  the  taxable  year  with  respect  to  the 
business  or  property  relating  to  the  production ; and 

617.  (e)  Losses  actually  sustained  within  the  taxable  year  in  connection  with 
the  business  of  producing  such  products,  including  lossses  from  fire,  flood,  storm,  or 
other  casualties,  and  not  compensated  for  by  insurance  or  otherwise. 

Sec.  1202.  That  if  any  such  person  during  any  taxable 
year  or  part  thereof,  whether  under  any  agreement,  arrange- 
ment, or  understanding  or  otherwise,  sells  or  disposes  of  any 
product  of  such  mine,  quarry,  mill,  cannery,  workshop, 
factory,  or  manufacturing  establishment  at  less  than  the^  fair 
market  price  obtainable  therefor  either  (a)  in  such  manner  as  directly  or  indirectly 
to  benefit  such  person  or  any  person  directly  or  indirectly  interested  in  the  business 
of  such  person;  or  (b)  with  intent  to  cause  such  benefit;  the  gross  amount  received 
or  accrued  for  such  year  or  part  thereof  from  the  sale  or  disposition  of  such  product 
shall  be  taken  to  be  the  amount  which  would  have  been  received  or  accrued  from 
the  sale  or  disposition  of  such  product  if  sold  at  the  fair  market  price. 

Sec.  1203.  (a)  That  no  person  subject  to  the  provisions 

G d faith  n cer  title  shall  be  liable  for  the  tax  herein  imposed  if 

tificate  " the  only  employment  or  permission  to  work  which  but  for 

this  section  would  subject  him  to  the  tax,  has  been  of  a child 
as  to  whom  such  person  has  in  good  faith  procured  at  the  time  of  employing  such 
child  or  permitting  him  to  work,  and  has  since  in  good  faith  relied  upon  and  kept 
on  file  a certificate,  issued  in  such  form,  under  such  conditions  and  by  such  persons 
as  may  be  prescribed  by  a board  consisting  of  the  -Secretary,  the  Commissioner,  and 
the  Secretary  of  Labor,  showing  the  child  to  be  of  such  age  as  not  to  subject  such 
person  to  the  tax  imposed  by  this  title.  Any  person  who  knowingly  makes  a false 
statement  or  presents  false  evidence  in  or  in  relation  to  any  such  certificate  or 
application  therefor  shall  be  punished  by  a fine  of  not  less  than  $100,  nor  more 
than  $1,000,  or  by  imprisonment  for  not  more  than  three  months,  or  by  both  such 
fine  and  imprisonment,  in  the  discretion  of  the  court. 

In  any  State  designated  to  such  board  an  employment 
certificate  or  other  similar  paper  as  to  the  age  of  the  child, 
& e ’ issued  under  the  laws  of  that  State,  and  not  consistent  with 

the  provisions  of  this  title,  shall  have  the  same  force  and  effect  as  a certificate  herein 
provided  for. 

62i  (b)  The  tax  imposed  by  this  title  shall  not  be  imposed 

Mistake  of  fact  *n  t^ie  case  an^  Person  wh°  proves  to  the  satisfaction  of 
the  Secretary  that  the  only  employment  or  permission  to  work 
which  but  for  this  Section  would  subject  him  to  the  tax,  has  been  of  a child  employed 

81 


or  permitted  to  work  under  a mistake  of  fact  as  to  the  age  of  such  child,  and  with- 
out intention  to  evade  the  tax. 

622  Sec.  1204.  That  on  or  before  the  first  day  of  the  third 

T?#»fnrn  +r»  month  following  the  close  of  each  taxable  year,  a true  and 

0 ’ accurate  return  under  oath  shall  be  made  by  each  person  sub- 

ject to  the  provisions  of  this  title  to  the  collector  for  the  district  in  which  such  person 
has  his  principal  office  or  place  of  business,  in  such  form  as  the  Commissioner,  with 
the  approval  of  the  Secretary,  shall  prescribe,  setting  forth  specifically  the  gross 
amount  of  income  received  or  accrued  during  such  year  from  the  sale  or  disposition 
of  the  product  of  any  mine,  quarry,  mill,  cannery,  workshop,  factory,  or  manufac- 
turing establishment,  in  which  children  have  been  employed  subjecting  him  to  the 
tax  imposed  by  this  title,  and  from  the  total  thereof  deducting  the  aggregate  items 
of  allowance  authorized  by  this  title,  and  such  other  particulars  as  to  the  gross 
receipts  and  items  of  allowance  as  the  Commissioner,  with  the  approval  of  the 
Secretary,  may  require. 

Sec.  1205.  That  all  such  returns  shall  be  transmitted 
° A* « c e>  « « mpnf  anH  forthwith  by  the  collector  to  the  Commissioner,  who  shall, 
oavment  as  soon  as  practicable,  assess  the  tax  found  due  and  notify 

p ^ * the  person  making  such  return  of  the  amount  of  tax  for 

which  such  person  is  liable,  and  such  person  shall  pay  the  tax  to  the  collector  on  or 
before  thirty  days  from  the  date  of  such  notice. 

g24  Sec.  1206.  That  for  the  purposes  of  this  Act  the  Com- 

Authoritv  to  in-  m^ssi°ner»  or  anY  other  person  duly  authorized  by  him,  shall 
soect  ^ " have  authority  to  enter  and  inspect  at  any  time  any  mine, 

p * quarry,  mill,  cannery,  workshop,  factory,  or  manufacturing 

establishment.  The  Secretary  of  Labor,  or  any  person  duly  authorized  by  him,  shall, 
for  the  purpose  of  complying  with  a request  of  the  Commissioner  to  make  such  an 
inspection,  have  like  authority,  and  shall  make  report  to  the  Commissioner  of 
inspections  made  under  such  authority  in  such  form  as  may  be  prescribed  by  the 
Commissioner  with  the  approval  of  the  Secretary  of  the  Treasury. 
g25  Any  person  who  refuses  or  obstructs  entry  or  inspection 

Penalties  authorized  by  this  section  shall  be  punished  by  a fine  of  not 

more  than  $1,000,  or  by  imprisonment  for  not  more  than 
one  year,  or  both  such  fine  and  imprisonment. 

g2Q  Sec.  1207.  That  as  used  in  this  title  the  term  “taxable 

rf*  . „par  year”  shall  have  the  same  meaning  as  provided  for  the  pur- 

^ * poses  of  income  tax  in  Section  200  (par.  16 ).  The  first  tax- 

able year  for  the  purposes  of  this  title  shall  be  the  period  between  sixty  days  after 
the  passage  of  this  Act  and  Decembr  31,  1919,  both  inclusive,  or  such  portion  of  such 
period  as  is  included  within  the  fiscal  year  (as  defined  in  Section  200)  (par.  16 ) of 
the  taxpayer. 

TITLE  XIII.— GENERAL  ADMINISTRATIVE  PROVISIONS 

£27  Sec.  1300.  That  hereafter  the  salary  of  the  Commissioner 

Salary  of  Commis-  t>e  $10,000  a year.  The  difference  between  the  amount 

sioner  ^ " aPProPriated  under  existing  law  and  the  salary  herein  estab- 

lished shall,  for  the  period  between  the  passage  of  this  Act 
and  July  1,  1919,  be  paid  out  of  the  appropriations  for  collecting  internal  revenue. 

___  Sec.  1301.  (a)  That  hereafter  there  may  be  employed 

. in  the  Bureau  of  Internal  Revenue,  in  lieu  of  the  deputy  com- 
JJeputy  commis-  missioners  whose  salaries  are  now  fixed  by  law,  five  deputy 
sioners.  commissioners  and  an  assistant  to  the  Commissioner,  who 

shall  each  receive  a salary  of  $5,000  a year,  payable  monthly.  The  assistant  to  the 
Commissioner  may  be  authorized  by  the  Commissioner  to  perform  any  duties  which 
the  deputy  commissioners  may  perform  under  existing  law. 

(b)  The  salaries  of  collectors  may  be  readjusted  and 
increased  under  such  regulations  as  may  be  prescribed  by  the 
Commissioner,  subject  to  the  approval  of  the  Secretary,  but 
no  collector  shall  receive  a salary  in  excess  of  $6,000  a year. 

(c)  There  is  hereby  appropriated,  out  of  any  money  in 
the  Treasury  not  otherwise  appropriated,  for  the  fiscal  year 
ending  June  30,  1919,  the  sum  of  $7,500,000  for  the  expenses 
of  assessing  and  collecting  the  internal-revenue  taxes  as 


629. 

Salaries  of  col- 
lectors. 

630. 

Appropriation  for 
expenses. 

provided  in  this  Act,  including  the  employment  of  necessary  officers,  attorneys,  experts, 

82 


agents,  inspectors,  deputy  collectors,  clerks,  janitors,  and  messengers  in  the  District 
of  Columbia  and  the  several  collection  districts,  to  be  appointed  as  provided  by  law, 
telegraph  and  telephone  service,  rental  and  repair  of  quarters,  postage,  and  the  pur- 
chase of  such  supplies,  equipment,  furniture,  mechanical  devices,  printing,  stationery, 
law  books  and  books  of  reference,  not  to  exceed  $500  for  street  car  fares  in  the 
District  of  Columbia,  and  such  other  articles  as  may  be  necessary  for  use  in  the 
District  of  Columbia  and  the  several  collection  districts : Provided,  That  not  more 
than  $2,750,000  of  the  total  amount  appropriated  by  this  section  may  be  expended  in 
the  Bureau  of  Internal  Revenue,  in  the  District  of  Columbia. 

(d)  (1)  There  is  hereby  created  a board  to  be  known 
™ as  the  “Advisory  Tax  Board,”  hereinafter  called  the  Board, 
g a v 1 s 0 r y aX  anc*  t°  be  composed  of  not  to  exceed  six  members  to  be 
S5°  ra’  appointed  by  the  Commissioner  with  the  approval  of  the 

Secretary.  The  Board  shall  cease  to  exist  at  the  expiration  of  two  years  after 
the  passage  of  this  Act,  or  at  such  earlier  time  as  the  Commissioner  with  the 
approval  of  the  Secretary  may  designate. 

632.  Vacancies  in  the  membership  of  the  board  shall  be  filled  in  the  same 
manner  as  an  original  appointment.  Any  member  shall  be  subject  to  removal  by 
the  Commissioner  with  the  approval  of  the  Secretary.  The  Commissioner,  with 
the  approval  of  the  Secretary,  shall  designate  the  chairman  of  the  Board.  Each 
member  shall  receive  an  annual  salary  of  $9,000,  payable  monthly,  together  with 
actual  necessary  expenses  when  absent  from  the  District  of  Columbia  on  official 
business. 


633. 

Duties  of 
Board. 


(2)  The  Commissioner  may,  and  on  the  request  of 
t k e any  taxpayer  directly  interested  shall,  submit  to  the  Board 


634. 

Offices. 


any  question  relating  to  the  interpretation  or  administra- 
tion of  the  income,  war-profits  or  excess-profits  tax  laws, 
and  the  Board  shall  report  its  findings  and  recommendations  to  the  Commissioner. 

(3)  The  board  shall  have  its  office  in  the  Bureau  of 
Internal  Revenue  in  the  District  of  Columbia.  The  ex- 
penses and  salaries  of  members  of  the  Board  shall  be 
audited,  allowed,  and  paid  out  of  appropriations  for  collecting  internal  revenue, 
in  the  same  manner  as  expenses  and  salaries  of  employees  of  the  Bureau  of 
Internal  Revenue  are  audited,  allowed,  and  paid. 

goc  (4)  The  Board  shall  have  the  power  to  summon  wit- 

P wers  f Board  nesses,  take  testimony,  administer  oaths  and  to  require 
° 0 * any  person  to  produce  books,  papers,  documents,  or  other 

data  relating  to  any  matter  under  investigation  by  the  Board.  Any  member  of 
the  Board  may  sign  subpoenas  and  members  and  employees  of  the  Bureau  of 
Internal  Revenue  designated  to  assist  the  Board,  when  authorized  by  the  Board, 
may  administer  oaths,  examine  witnesses,  take  testimony  and  receive  evidence. 

Sec.  1302.  That  all  internal-revenue  agents  and  in- 
spectors shall  be  granted  leave  of  absence  with  pay,  which 
shall  not  be  cumulative,  not  to  exceed  thirty  days  in  any 
calendar  year,  under  such  regulations  as  the  Commis- 
sioner, with  the  approval  of  the  Secretary,  may  prescribe. 

Sec.  1303.  (a)  That  there  is  hereby  created  a Legis- 

lative Drafting  Service  under  the  direction  of  two  drafts- 
men, one  of  whom  shall  be  appointed  by  the  President  of 
the  Senate,  and  one  by  the  Speaker  of  the  House  of  Repre- 
sentatives, without  reference  to  political  affiliations  and  solely  on  the  ground  of 
fitness  to  perform  the  duties  of  the  office.  Each  draftsman  shall  receive  a salary 
of  $5,000  a year,  payable  monthly.  The  draftsmen  shall,  subject  to  the  approval 
of  the  President  of  the  Senate  and  the  Speaker  of  the  House  of  Representatives, 
employ  and  fix  the  compensation  of  such  assistant  draftsmen,  clerks,  and  other 
employees,  and  purchase  such  furniture,  office  equipment,  books,  stationery,  and 
other  supplies,  as  may  be  necessary  for  the  proper  performance  of  the  duties  of 
the  service  and  as  may  be  appropriated  for  by  Congress. 

(b)  The  Drafting  Service  shall  aid  in  drafting  public 
bills  and  resolutions  or  amendments  thereto  on  the  re- 
quest of  any  committee  of  either  House  of  Congress,  but 
the  Library  Committee  of  the  Senate  and  the  Library 
Committee  of  the  House  of  Representatives,  respectively, 
may  determine  the  preference,  if  any,  to  be  given  to  such 

83 


636. 

Leave  of  absence 
granted  agents  and 
inspectors. 

637. 

Legislative  Draft- 
ing Service  created. 


638. 

To  aid  in  drafting 
bills  and  resolutions 
or  amendments 
thereto. 


requests  of  the  committees  of  either  House,  respectively.  The  draftsmen  shall, 
from  time  to  time,  prescribe  rules  and  regulations  for  the  conduct  of  the  work 
of  the  service  for  the  committees  of  each  House,  subject  to  the  approval  of  the 
Library  Committee  of  each  House,  respectively. 


ggg  (c)  For  the  remainder  of  the  current  fiscal  year  there 

Armrrmriafirtn  *s  hereby  appropriated,  out  of  any  money  in  the  Treasury 

PP  P * not  otherwise  appropriated,  the  sum  of  $25,000,  or  so  much 

thereof  as  may  be  necessary,  for  the  purpose  of  defraying  the  expenses  of  the 
establishment  and  maintenance  of  the  service,  including  the  payment  of  salaries 
herein  authorized.  One-half  of  all  appropriations  for  the  service  shall  be  dis- 
bursed by  the  Secretary  of  the  Senate  and  one-half  by  the  Clerk  of  the  House  of 
Representatives. 

£40  Sec.  1304.  That  there  shall  be  levied,  collected,  and 

T a y n n Paid  in  the  United  States,  upon  articles  coming  into  the 

imported  from  Virgin  United  States  from  the  Virgin  Islands  a tax  equal  to  the 
Islands  internal  revenue  tax  imposed  in  the  United  States  upon 

like  articles  of  domestic  manufacture;  such  articles  shipped 
from  such  islands  to  the  United  States  shall  be  exempt  from  the  payment  of  any 
tax  imposed  by  the  internal-revenue  laws  of  such  islands:  Provided,  That  there 
shall  be  levied,  collected,  and  paid  in  such  islands,  upon  articles  imported  from  the 
United  States,  a tax  equal  to  the  internal-revenue  tax  imposed  in  such  islands  upon 
like  articles  there  manufactured;  and  such  articles  going  into  such  islands  from 
the  United  States  shall  be  exempt  from  payment  of  any  tax  imposed  by  the 
internal-revenue  laws  of  the  United  States. 


641. 

Applicable  p r o v 
sions  extended. 


Sec.  1305.  That  all  administrative,  special,  or  stamp 
provisions  of  law,  including  the  law  relating  to  the  assess- 
ment of  taxes,  so  far  as  applicable,  are  hereby  extended 
to  and  made  a part  of  this  Act,  and  every  person  liable 
to  any  tax  imposed  by  this  Act,  or  for  the  collection  thereof,  shall  keep  such 
records  and  render,  under  oath,  such  statements  and  returns,  and  shall  comply 
with  such  regulations  as  the  Commissioner,  with  the  approval  of  the  Secretary, 
may  from  time  to  time  prescribe. 


Whenever  in  the  judgment  of  the  Commissioner  neces- 
sary he  may  require  any  person,  by  notice  served  upon 
him,  to  make  a return  or  such  statements  as  he  deems  suf- 
ficient to  show  whether  or  not  such  person  is  liable  to  tax. 

The  Commissioner,  for  the  purpose  of  ascertaining  the 
correctness  of  any  return  or  for  the  purpose  of  making  a 
return  where  none  has  been  made,  is  hereby  authorized, 
by  any  revenue  agent  or  inspector  designated  by  him  for 
that  purpose,  to  examine  any  books,  papers,  records  or  memoranda  bearing  upon 
the  matters  required  to  be  included  in  the  return,  and  may  require  the  attendance 
of  the  person  rendering  the  return  or  of  any  officer  or  employee  of  such  person, 
or  the  attendance  of  any  other  person  having  knowledge  in  the  premises,  and 
may  take  his  testimony  with  reference  to  the  matter  required  by  law  to  be  included 
in  such  return,  with  power  to  administer  oaths  to  such  person  or  persons. 


642. 

Returns  or  state- 
ments. 

643. 

A u t h o rization  to 
examine  papers,  etc. 


644. 


Sec.  1306.  That  where  floor  taxes  are  imposed  by 
T?  1 . f this  Act  in  respect  to  articles  or  commodities,  in  respect 

, r>avm#»ntc  U to  which  the  tax  imposed  by  existing  law  has  been  paid, 
p y ' the  person  required  by  this  Act  to  pay  the  tax  shall, 

within  thirty  days  after  its  passage,  make  return  under  oath  in  such  form  and 
under  such  regulations  as  the  Commissioner,  with  the  approval  of  the  Secretary, 
shall  prescribe.  Payment  of  the  tax  shown  to  be  due  may  be  extended  to  a date 
not  exceeding  seven  months  from  the  passage  of  this  Act,  upon  the  filing  of  a 
bond  for  payment  in  such  form  and  amount  and  with  such  sureties  as  the  Commis- 
sioner, with  the  approval  of  the  Secretary,  may  prescribe. 


645. 

Where 


Sec.  1307.  That  in  all  cases  where  the  method  of  col- 
, , e lecting  the  tax  imposed  by  this  Act  is  not  specifically  pro- 

„ ^ vided  in  this  Act,  the  tax  shall  be  collected  in  such  man- 

collecn  g taxes  not  ner  ag  tjie  commiSsioner,  with  the  approval  of  the  Secre- 
speci  ea.  tary,  may  prescribe.  All  administrative  and  penalty  pro- 

visions of  Title  XI  {par.  575-590 ) of  this  Act,  in  so  far  as  applicable,  shall  apply 
to  the  collection  of  any  tax  which  the  Commissioner  determines  or  prescribes 
shall  be  paid  by  stamp. 


84 


646. 

Additional  penalty 
for  failure  to  pay  or 
to  collect  tax,  make 
returns  or  supply  in- 
formation. 


Sec.  1308.  (a)  That  any  person  required  under  Titles 

V,  VI,  VII,  VIII,  IX,  X,  or  XII,  to  pay,  or  to  collect, 
account  for  and  pay  over  any  tax,  or  required  by  law  or 
regulations  made  under  authority  thereof  to  make  a re- 
turn or  supply  any  information  for  the  purposes  of  the 
computation,  assessment  or  collection  of  any  such  tax, 
who  fails  to  pay,  collect,  or  truly  account  for  and  pay 
over  any  such  tax,  make  any  such  return  or  supply  any  such  information  at  the 
time  or  times  required  by  law  or  regulation  shall  in  addition  to  other  penalties 
provided  by  law  be  subject  to  a penalty  of  not  more  than  $1,000. 

(b)  Any  person  who  willfully  refuses  to  pay,  collect, 
or  truly  account  for  and  pay  over  any  such  tax,  make  such 

Willful  refusal,  or  return  or  supply  such  information  at  the  time  or  times 
attempt  to  evade  tax.  reqUirecj  by  law  or  regulation,  or  who  willfully  attempts 
in  any  manner  to  evade  such  tax  shall  be  guilty  of  a misdemeanor  and  in  addition 
to  other  penalties  provided  by  law  shall  be  fined  not  more  than  $10,000  or  impris- 
oned for  not  more  than  one  year,  or  both,  together  with  the  costs  of  prosecution. 

(c)  Any  person  who  willfully  refuses  to  pay,  collect, 
i + or  truly  account  for  and  pay  over  any  such  tax  shall  in 

Willful  refusal  to  addition  to  other  penalties  provided  by  law  be  liable  to'  a 
pay  or  collect  tax.  penalty  of  the  amount  of  the  tax  evaded,  or  not  paid,  col- 
lected, or  accounted  for  and  paid  over,  to  be  assessed  and  collected  in  the  same 
manner  as  taxes  are  assessed  and  collected:  Provided,  however , That  no  penalty 
shall  be  assessed  under  this  subdivision  for  any  offense  for  which  a penalty  may 
be  assessed  under  authority  of  Section  3176  of  the  Revised  Statutes  (par.  673-676 ), 
as  amended,  or  of  Section  605  (par.  366)  or  620  (par.  396 ) of  this  Act,  or  for  any 
offense  for  which  a penalty  has  been  recovered  under  Section  3256  of  the  Revised 
Statutes. 

g.g  (d)  The  term  “person”  as  used  in  this  section  includes 

° “Person”  defined  an  °fficer  or  employee  of  a corporation  or  a member  or 
employee  of  a partnership,  who  as  such  officer,  employee, 
or  member  is  under  a duty  to  perform  the  act  in  respect  of  which  the  violation 


Sec.  1309.  That  the  Commissioner,  with  the  approval 
of  the  Secretary,  is  hereby  authorized  to  make  all  needful 
rules  and  regulations  for  the  enforcement  of  the  provisions 
of  this  Act. 

The  Commissioner  with  such  approval  may  by  regula- 
tion provide  that  any  return  required  by  Titles  V,  VI,  VII, 
VIII,  IX  or  X to  be  under  oath  may,  if  the  amount  of  the 
tax  covered  thereby  is  not  in  excess  of  $10,  be  signed  or 
acknowledged  before  two  witnesses  instead  of  under  oath. 

Sec.  1310.  (a)  That  in  the  case  of  any  overpayment 

or  overcollection  of  any  tax  imposed  by  Section  628  (par. 
407-409 ) or  630  (par.  412)  or  by  Title  V,  Title  VIII,  or 
Title  IX,  the  person  making  such  overpayment  or  over- 
collection may  take  credit  therefor  against  taxes  due  upon 
any  monthly  return,  and  shall  make  refund  of  any  excessive  amount  collected  by 
him  upon  proper  application  by  the  person  entitled  thereto. 

(b)  Wherever  in  this  Act  a tax  is  required  to  be  paid 
by  the  purchaser  to  the  vendor  at  the  time  of  a sale,  and 
such  sale  is  made  on  credit,  then,  under  regulations  pre- 
scribed by  the  Commissioner,  with  the  approval  of  the 

Secretary,  the  tax  may,  at  the  option  of  the  vendor,  be  returned  and  paid  by  him 
to  the  United  States  as  if  paid  to  him  by  the  purchaser  at  the  time  of  the  sale, 
and  in  such  case  the  vendor  shall  have  a right  of  action  in  any  court  of  competent 
jurisdiction  against  the  purchaser  for  the  amount  of  the  tax  so  returned  and  paid 
to  the  United  States. 

(c)  Under  such  rules  and  regulations  as  the  Commis- 

(nr  sioner  with  the  approval  of  the  Secretary  may  prescribe, 

P * the  taxes  imposed  under  the  provisions  of  Titles  VI,  VII 
or  IX  shall  not  apply  in  respect  to  articles  sold  or  leased  for  export  and  in  due 
course  so  exported.  Under  such  rules  and  regulations  the  amount  of  any  internal- 
revenue  tax  erroneously  or  illegally  collected  in  respect  to  exported  articles  may 
be  refunded  to  the  exporter  of  the  article,  instead  of  to  the  manufacturer,  if  the 
manufacturer  waives  any  claim  for  the  amount  so  to  be  refunded. 


650. 

Rules  and  regula- 
tions. 

651. 

Where  tax  not  in 
excess  of  $10. 


652. 

O v e r-payment  or 
over-col  lection  of 
taxes. 


653. 

Sales  made 
credit. 


85 


655. 

Stamps  on  hand. 


656. 

Contracts  made 
prior  to  5-9-17  where 
tax  cannot  be  added 
to  price. 


657. 

Contracts  with 
dealers  p r io  r to 
9-3-18. 


Sec.  1311.  That  where  the  rate  of  tax  imposed  by  this 
Act,  payable  by  stamps,  is  an  increase  over  previously 
existing  rates,  stamps  on  hand  in  the  collectors’  offices 
and  in  the  Bureau  of  Internal  Revenue  may  continue  to  be  used  until  the  supply 
on  hand  is  exhausted,  but  shall  be  sold  and  accounted  for  at  the  rates  provided 
by  this  Act,  and  assessment  shall  be  made  against  manufacturers  and  other  tax- 
payers having  such  stamps  on  hand  on  the  day  this  Act  takes  effect  for  the  dif- 
ference between  the  amount  paid  for  such  stamps  and  the  tax  due  at  the  rates 
provided  by  this  Act. 

Sec.  1312.  (1)  That  (a)  if  any  person  has  prior  to 

May  9,  1917,  made  a bona  fide  contract  with  a dealer  for 
the  sale  or  lease,  after  the  tax  takes  effect,  of  any  article  in 
respect  to  which  a tax  is  imposed  under  Title  VI,  VII,  or 
IX,  or  under  subdivision  13  of  Schedule  A of  Title  XI 
{par.  6o6)  or  under  this  subdivision,  and  (b)  if  such  con- 
tract does  not  permit  the  adding  of  the  whole  of  such  tax  to  the  amount  to  be  paid 
under  such  contract,  then  the  vendee  or  lessee  shall,  in  lieu  of  the  vendor  or  lessor, 
pay  so  much  of  such  tax  as  is  not  so  permitted  to  be  added  to  the  contract  price. 
If  a contract  of  the  character  above  described  was  made  with  any  person  other 
than  a dealer,  the  tax  collected  under  this  Act  shall  be  the  tax  in  force  on  May 
9,  1917. 

(2)  If  (a)  any  person  has  prior  to  September  3,  1918, 
made  a bona  fide  contract  with  a dealer  for  the  sale  or 
lease,  after  the  tax  takes  effect,  of  any  article  in  respect 
to  which  a tax  is  imposed  under  Title  VI,  VII,  or  IX,  or 
under  subdivision  13  of  Schedule  A of  Title  XI  {par.  6o6 ), 

or  under  this  subdivision,  and  in  respect  to  which  no  corresponding  tax  was 
imposed  bjr  the  Revenue  Act  of  1917,  and  (b)  such  contract  does  not  permit  the 
adding,  to  the  amount  to  be  paid  under  such  contract,  of  the  whole  of  the  tax 
imposed  by  this  Act,  then  the  vendee  or  lessee  shall,  in  lieu  of  the  vendor  or 
lessor,  pay  so  much  of  the  tax  imposed  by  this  Act  as  is  not  so  permitted  to  be 
added  to  the  contract  price.  If  a contract  of  the  character  above  described  was 
made  with  any  person  other  than  a dealer,  no  tax  shall  be  collected  under  this  Act. 

(3)  If  (a)  any  person  has  prior  to  September  3,  1918, 
made  a bona  fide  contract  with  a dealer  for  the  sale  or 
lease,  after  the  tax  takes  effect,  of  any  article  in  respect  to 
which  a tax  is  imposed  under  Title  VI,  VII,  or  IX,  or 
under  subdivision  13  of  Schedule  A of  Title  XI  {par.  6o6), 

or  under  this  subdivision,  and  in  respect  to  which  a corresponding  tax  was 
imposed  by  the  Revenue  Act  of  1917,  and  (b)  such  contract  does  nor  permit  the 
adding,  to  the  amount  to  be  paid  under  such  contract,  of  the  whole  of  the  differ- 
ence between  such  tax  and  the  corresponding  tax  imposed  by  the  Revenue  Act 
of  1917,  then  the  vendee  or  lessee  shall,  in  lieu  of  the  vendor  or  lessor,  pay  so 
much  of  such  difference  as  is  not  so  permitted  to  be  added  to  the  contract  price. 
If  a contract  of  the  character  above  described  was  made  with  any  person  other 
than  a dealer,  the  tax  collected  under  this  Act  shall  be  the  tax  in  force  on  Sep- 
tember 3,  1918. 

fic.Q  (4)  The  taxes  payable  by  the  vendee  or  lessee  under 

, . . this  section  shall  be  paid  to  the  vendor  or  lessor  at  the 

l axes  to  De  paid  to  tjme  the  saie  or  lease  is  consummated,  and  collected,  re- 
vendor  or  lessor.  turned,  and  paid  to  the  United  States  by  such  vendor  or 

lessor  in  the  same  manner  as  provided  in  Section  502  {par.  336-340). 

(5)  The  term  “dealer”  as  used  in  this  section  includes 
a vendee  who  purchases  any  article  with  intent  to  use  it  in 
the  manufacture  or  production  of  another  article  intended 
for  sale. 

(6)  This  section  shall  not  apply  to  any  tax  imposed  by 
Section  906  {par.  310). 

Sec.  1313.  That  in  the  payment  of  any  tax  under  this 
Act  not  payable  by  stamp  a fractional  part  of  a cent  shall 
be  disregarded  unless  it  amounts  to  one-half  cent  or  more, 
in  which  case  it  shall  be  increased  to  1 cent. 

Sec.  1314.  That  collectors  may  receive,  at  par  with  an 
adjustment  for  accrued  interest,  certificates  of  indebted- 
ness issued  by  the  United  States  and  uncertified  checks  in 
payment  of  income,  war-profits  and  excess-profits  taxes 
and  any  other  taxes  payable  other  than  by  stamp,  during 
such  time  and  under  such  regulations  as  the  Commissioner, 

86 


658. 

V/  h e r e increased 
tax  cannot  be  added 
to  contract  price. 


660. 


“Dealer”  defined. 
661. 

Not  applicable. 

662. 

Fraction  of  a cent. 


663. 

U.  S.  certificates 
of  indebtedness  and 
checks  in  payment  of 
taxes. 


with  the  approval  of  the  Secretary,  shall  prescribe;  but  if  a check  so  received  is 
not  paid  by  the  bank  on  which  it  is  drawn  the  person  by  whom  such  check  has 
been  tendered  shall  remain  liable  for  the  payment  of  the  tax  and  for  all  legal 
penalties  and  additions  the  same  as  if  such  check  had  not  been  tendered. 

Section  3315  R.  S.  Sec.  1315.  That  Section  3315  of  the  Revised  Statutes, 
amended.  as  amended,  is  hereby  amended  to  read  as  follows: 

. “Sec.  3315.  The  Commissioner  of  Internal  Revenue 

b P . . . may,  under  regulations  prescribed  by  him  with  the  approval 

Kepiacing  lost  Q£  t^e  Secretary  of  the  Treasury,  issue  stamps  for  restamp- 
stamps.  ing  packages  of  distilled  spirits,  tobacco,  cigars,  snuff, 

cigarettes,  fermented  liquors,  and  wines  which  have  been  duly  stamped  but  from 
which  the  stamps  have  been  lost  or  destroyed  by  unavoidable  accident.” 


Section  3220  R.  S. 
amended. 

665. 

Repayment  of  unau 
thorized  collections. 


Section  3225  R.  S. 
amended. 

666. 

Refunds  on  second 
assessments. 


Sec.  1316.  (a)  That  Section  3220  of  the  Revised 

Statutes  is  hereby  amended  to  read  as  follows: 

“Sec.  3220.  The  Commissioner  of  Internal  Revenue, 
subject  to  regulations  prescribed  by  the  Secretary  of  the 
Treasury,  is  authorized  to  remit,  refund,  and  pay  back  all 
taxes  erroneously  or  illegally  assessed  or  collected,  all 
penalties  collected  without  authority,  and  all  taxes  that  appear  to  be  unjustly 
assessed  or  excessive  in  amount,  or  in  any  manner  wrongfully  collected;  also  to 
repay  to  any  collector  or  deputy  collector  the  full  amount  of  such  sums  of  money 
as  may  be  recovered  against  him  in  any  court,  for  any  internal  revenue  taxes 
collected  by  him,  with  the  cost  and  expenses  of  suit;  also  all  damages  and  costs 
recovered  against  any  assessor,  assistant  assessor,  collector,  deputy  collector, 
agent,  or  inspector,  in  any  suit  brought  against  him  by  reason  of  anything  done 
in  the  due  performance  of  his  official  duty,  and  shall  make  report  to  Congress  at 
the  beginning  of  each  regular  session  of  Congress  of  all  transactions  under  this 
section.” 

(b)  Section  3225  of  the  Revised  Statutes  of  the  United 
States  is  hereby  amended  to  read  as  follows: 

“Sec.  3225.  When  a second  assessment  is  made  in 
case  of  any  list,  statement,  or  return,  which  in  the  opinion 
of  the  collector  or  deputy  collector  was  false  or  fraudulent, 
or  contained  any  understatement  or  undervaluation,  such 
assessment  shall  not  be  remitted,  nor  shall  taxes  collected  under  such  assess- 
ment be  refunded,  or  paid  back,  or  recovered  by  any  suit,  unless  it  is  proved  that 
such  list,  statement,  or  return  was  not  willfully  false  or  fraudulent  and  did  not 
contain  any  willful  understatement  or  undervaluation.” 

(c)  That  the  paragraph  of  Section  3689  of  the  Revised  Statutes,  as  amended, 
reading  as  follows: 

667.  “Refunding  taxes  illegally  collected  (internal  reve- 

a-nrn  nue) : To  refund  and  pay  back  duties  erroneously  or 
f j illegally  assessed  or  collected  under  the  internal-revenue 
j .•  laws,”  is  repealed  from  and  after  June  30,  1920;  and  the 

Secretary  of  the  Treasury  shall  submit  for  the  fiscal  year 
1921,  and  annually  thereafter,  an  estimate  of  appropriations  to  refund  and  pay 
back  duties  or  taxes  erroneously  or  illegally  assessed  or  collected  under  the 
internal-revenue  laws,  and  to  pay  judgments,  including  interest  and  costs,  rendered 
for  taxes  or  penalties  erroneously  or  illegally  assessed  or  collected  under  the 
internal-revenue  laws. 

Sec.  1317.  That  Sections  3164,  3165,  3167,  3172,  3173, 
and  3176  of  the  Revised  Statutes  as  amended  are  hereby 
amended  to  read  as  follows: 

“Sec.  3164.  It  shall  be  the  duty  of  every  collector  of 
internal  revenue  having  knowledge  of  any  willful  violation 
of  any  law  of  the  United  States  relating  to  the  revenue, 
within  thirty  days  after  coming  into  possession  of  such 
knowledge,  to  file  with  the  district  attorney  of  the  district 
in  which  any  fine,  penalty,  or  forfeiture  may  be  incurred,  a statement  of  all  the 
facts  and  circumstances  of  the  case  within  his  knowledge,  together  with  the  names 
of  the  witnesses,  setting  forth  the  provisions  of  law  believed  to  be  so  violated  on 
which  reliance  may  be  had  for  condemnation  or  conviction. 

ggg  “Sec.  3165.  Every  collector,  deputy  collector,  internal 

Powers  of  internal  revenue  agent,  and  internal  revenue  officer  assigned  to 
revenue  employees  duty  under  an  internal  revenue  agent,  is  authorized  to 
p y * administer  oaths  and  to  take  evidence  touching  any  part 

87 


Sections  R. 
amended. 


S. 


668. 

Col  lectors  having 
knowledge  of  willful 
violations  of  law. 


of  the  administration  of  the  internal-revenue  laws  with  which  he  is  charged,  or 
where  such  oaths  and  evidence  are  authorized  by  law  or  regulation  authorized  by 
law  to  be  taken. 


“Sec.  3167.  It  shall  be  unlawful  for  any  collector, 
deputy  collector,  agent,  clerk,  or  other  officer  or  employee 
of  the  United  States  to  divulge  or  to  make  known  in  any 
manner  whatever  not  provided  by  law  to  any  person  the 


670. 


Penalties  for  dis- 
closing information. 


operations,  style  of  work,  or  apparatus  of  any  manufacturer  or  producer  visited 
by  him  in  the  discharge  of  his  official  duties,  or  the  amount  or  source  of  income, 
profits,  losses,  expenditures,  or  any  particular  thereof,  set  forth  or  disclosed  in 
any  income  return,  or  to  permit  any  income  return  or  copy  thereof  or  any  book 
containing  any  abstract  or  particulars  thereof  to  be  seen  or  examined  by  any 
person  except  as  provided  by  law;  and  it  shall  be  unlawful  for  any  person  to  print 
or  publish  in  any  manner  whatever  not  provided  by  law  any  income  return,  or  any 
part  thereof  or  source  of  income,  profits,  losses,  or  expenditures  appearing  in 
any  income  return;  and  any  offense  against  the  foregoing  provision  shall  be  a 
misdemeanor  and  be  punished  by  a fine  not  exceeding  $1,000  or  by  imprisonment 
not  exceeding  one  year,  or  both,  at  the  discretion  of  the  court;  and  if  the  offender 
be  an  officer  or  employee  of  the  United  States  he  shall  be  dismissed  from  office 
or  discharged  from  employment. 


“Sec.  3172.  Every  collector  shall,  from  time  to  time, 
cause  his  deputies  to  proceed  through  every  part  of  his 
district  and  inquire  after  and  concerning  all  persons  therein 


671. 


Inquisition. 


who  are  liable  to  pay  any  internal-revenue  tax,  and  all  persons  owning  or  having 
the  care  and  management  of  any  objects  liable  to  pay  any  tax,  and  to  make  a list 
of  such  persons  and  enumerate  said  objects. 


“Sec.  3173.  It  shall  be  the  duty  of  any  person,  part- 
nership, firm,  association,  or  corporation,  made  liable  to 


672. 


n.cn  nro  1 rvr^T7ici/Mnc 


the  day  on  which  the  taxes  accrue,  to  make  a list  or  return,  verified  by  oath,  to 
the  collector  or  a deputy  collector  of  the  district  where  located,  of  the  articles  or 
objects,  including  the  quantity  of  goods,  wares,  and  merchandise,  made  or  sold 
and  charged  with  a tax,  the  several  rates  and  aggregate  amount,  according  to  the 
forms  and  regulations  to  be  prescribed  by  the  Commissioner  of  Internal  Revenue, 
with  the  approval  of  the  Secretary  of  the  Treasury,  for  which  such  person,  part- 
nership, firm,  association,  or  corporation  is  liable:  Provided,  That  if  any  person 
liable  to  pay  any  duty  or  tax,  or  owning,  possessing,  or  having  the  care  or  man- 
agement of  property,  goods,  wares,  and  merchandise,  article  or  objects  liable  to 
pay  any  duty,  tax,  or  license,  shall  fail  to  make  and  exhibit  a list  or  return  required 
by  law,  but  shall  consent  to  disclose  the  particulars  of  any  and  all  the  property, 
goods,  wares,  and  merchandise,  articles,  and  objects  liable  to  pay  any  duty  or  tax, 
or  any  business  or  occupation  liable  to  pay  any  tax  as  aforesaid,  then,  and  in  that 
case,  it  shall  be  the  duty  of  the  collector  or  deputy  collector  to  make  such  list  or 
return,  which,  being  distinctly  read,  consented  to,  and  signed  and  verified  by  oath 
by  the  person  so  owning,  possessing,  or  having  the  care  and  management  as 
aforesaid,  may  be  received  as  the  list  of  such  person:  Provided  further,  that  in 
case  no  annual  list  or  return  has  been  rendered  by  such  person  to  the  collector  or 
deputy  collector  as  required  by  law,  and  the  person  shall  be  absent  from  his  or 
her  residence  or  place  of  business  at  the  time  the  collector  or  a deputy  collector 
shall  call  for  the  annual  list  or  return,  it  shall  be  the  duty  of  such  collector  or 
deputy  collector  to  leave  at  such  place  of  residence  or  business,  with  some  one 
of  suitable  age  and  discretion,  if  such  be  present,  otherwise  to  deposit  in  the  near- 
est post  office,  a note  or  memorandum  addressed  to  such  person,  requiring  him 
or  her  to  render  to  such  collector  or  deputy  collector  the  list  or  return  required 
by  law  within  ten  days  from  the  date  of  such  note  or  memorandum,  verified  by 
oath.  And  if  any  person,  on  being  notified  or  required  as  aforesaid,  shall  refuse 
or  neglect  to  render  such  list  or  return  within  the  time  required  as  aforesaid,  or 
whenever  any  person  who  is  required  to  deliver  a monthly  or  other  return  of 
objects  subject  to  tax  fails  to  do  so  at  the  time  required,  or  delivers  any  return 
which,  in  the  opinion  of  the  collector,  is  erroneous,  false,  or  fraudulent,  or  con- 
tains any  undervaluation  or  understatement,  or  refuses  to  allow  any  regularly 
authorized  Government  officer  to  examine  the  books  of  such  person,  firm,  or  cor- 
poration, it  shall  be  lawful  for  the  collector  to  summon  such  person,  or  any  other 
person  having  possession,  custody,  or  care  of  books  of  account  containing  entries 


88 


673. 

When  collector  or 
deputy  shall  make  re- 
turn or  list. 


675. 

Penalties, 


relating  to  the  business  of  such  person  or  any  other  person  he  may  deem  proper, 
to  appear  before  him  and  produce  such  books  at  a time  and  place  named  in  the 
summons,  and  to  give  testimony  or  answer  interrogatories,  under  oath,  respecting 
any  objects  or  income  liable  to  tax  or  the  returns  thereof.  The  collector  may 
summon  any  person  residing  or  found  within  the  State  or  Territory  in  which  his 
district  lies;  and  when  the  person  intended  to  be  summoned  does  not  reside  and 
can  not  be  found  within  such  State  or  Territory,  he  may  enter  any  collection  dis- 
trict where  such  person  may  be  found  and  there  make  the  examination  herein 
authorized.  And  to  this  end  he  may  there  exercise  all  the  authority  which  he 
might  lawfully  exercise  in  the  district  for  which  he  was  commissioned:  Provided, 
that  ‘person,’  as  used  in  this  section,  shall  be  construed  to  include  any  corpora- 
tion, joint-stock  compan}'  or  association,  or  insurance  company  when  such  con- 
struction is  necessary  to  carry  out  its  provisions. 

“Sec.  3176.  If  any  person,  corporation,  company,  or 
association  fails  to  make  and  file  a return  or  list  at  the 
time  prescribed  by  law  or  by  regulation  made  under  author- 
ity of  law,  or  makes,  willfully  or  otherwise,  a false  or 
fraudulent  return  or  list,  the  collector  or  deputy  collector 
shall  make  the  return  or  list  from  his  own  knowledge  and  from  such  information 
as  he  can  obtain  through  testimony  or  otherwise.  In  any  such  case  the  Com- 
missioner may,  from  his  own  knowledge  and  from  such  information  as  he  can 
obtain  through  testimony  or  otherwise,  make  a return  or  amend  any  return  made 
by  a collector  or  deputy  collector.  Any  return  or  list  so  made  and  subscribed  by 
the  Commissioner,  or  by  a collector  or  deputy  collector  and  approved  by  the 
Commissioner,  shall  be  prima  facie  good  and  sufficient  for  all  legal  purposes. 

674.  “If  the  failure  to  file  a return  or  list  is  due  to  sickness  or  absence,  the 
collector  may  allow  such  further  time,  not  exceeding  thirty  days,  for  making  and 
filing  the  return  or  list  as  he  deems  proper. 

“The  Commissioner  of  Internal  Revenue  shall  deter- 
mine and  assess  all  taxes,  other  than  stamp  taxes,  as  to 
which  returns  or  lists  are  so  made  under  the  provisions 
of  this  section.  In  case  of  any  failure  to  make  and  file  a return  or  list  within  the 
time  prescribed  by  law,  or  prescribed  by  the  Commissioner  of  Internal  Revenue 
or  the  collector  in  pursuance  of  law,  the  Commissioner  of  Internal  Revenue  shall 
add  to  the  tax  25  per  centum  of  its  amount,  except  that  when  a return  is  filed  after 
such  a time  and  it  is  shown  that  the  failure  to  file  it  was  due  to  a reasonable  cause 
and  not  to  willful  neglect,  no  such  addition  shall  be  made  to  the  tax.  In  case  a 
false  or  fraudulent  return  or  list  is  willfully  made,  the  Commissioner  of  Internal 
Revenue  shall  add  to  the  tax  50  per  centum  of  its  amount. 

676.  “The  amount  so  added  to  any  tax  shall  be  collected  at  the  same  time  and 
in  the  same  manner  and  as  part  of  the  tax  unless  the  tax  has  been  paid  before 
the  discovery  of  the  neglect,  falsity,  or  fraud,  in  which  case  the  amount  so  added 
shall  be  collected  in  the  same  manner  as  the  tax.” 

g77  Sec.  1318.  That  if  any  person  is  summoned  under 

t ..  r j.  this  Act  to  appear,  to  testify,  or  to  produce  books,  papers 

t j .ri®  ^ .10I\  r°  u V or  other  data,  the  district  court  of  the  United  States  for 
1 ou  s .a.  district  in  which  such  person  resides  shall  have  juris- 

diction by  appropriate  process  to  compel  such  attendance,  testimony,  or  production 
of  books,  papers,  or  other  data. 

678.  The  district  courts  of  the  United  States  at  the  instance  of  the  United 
States  are  hereby  invested  with  such  jurisdiction  to  make  and  issue,  both  in  actions 
at  law  and  suits  in  equity,  writs  and  orders  of  injunction,  and  of  ne  exeat  republica, 
orders  appointing  receivers,  and  such  other  orders  and  process,  and  to  render 
such  judgments  and  decrees,  granting  in  proper  cases  both  legal  and  equitable 
relief  together,  as  may  be  necessary  or  appropriate  for  the  enforcement  of  the 
provisions  of  this  Act.  The  remedies  hereby  provided  are  in  addition  to  and  not 
exclusive  of  any  and  all  other  remedies  of  the  United  States  in  such  courts  or 
otherwise  to  enforce  such  provisions. 

67o  Sec.  1319.  That  whoever  in  connection  with  the  sale 

0/,'  . • or  lease,  or  offer  for  sale  or  lease,  of  any  article,  or  for  the 

increasing  p c o plirp0se  Qf  making  such  sale  or  lease,  makes  any  statement, 
under  pretext  o tax-  wr;tten  or  ora^  (1)  intended  or  calculated  to  lead  any  per- 
atlon‘  son  to  believe  that  any  part  of  the  price  at  which  such 

article  is  sold  or  leased,  or  offered  for  sale  or  lease,  consists  of  a tax  imposed 
under  the  authority  of  the  United  States,  or  (2)  ascribing  a particular  part  of 
such  price  to  a tax  imposed  under  the  authority  of  the  United  States,  knowing 

89 


680. 

U.  S.  bonds  in  lieu 
of  sureties  on  penal 
bonds. 


that  such  statement  is  false  or  that  the  tax  is  not  so  great  as  the  portion  of  such 
price  ascribed  to  such  tax,  shall  be  guilty  of  a misdemeanor  and  upon  conviction 
thereof  shall  be  punished  by  a fine  of  not  more  than  $1,000  or  by  imprisonment  not 
exceeding  one  year,  or  both. 

Sec.  1320.  That  wherever  by  the  laws  of  the  United 
States  or  regulations  made  pursuant  thereto,  any  person 
is  required  to  furnish  any  recognizance,  stipulation,  bond, 
guaranty,  or  undertaking,  hereinafter  called  “penal  bond” 
with  surety  or  sureties,  such  person  may,  in  lieu  of  such 
surety  or  sureties,  deposit  as  security  with  the  official  having  authority  to  approve 
such  penal  bond,  United  States  Liberty  bonds  or  other  bonds  of  the  United  States 
in  a sum  equal  at  their  par  value  to  the  amount  of  such  penal  bond  required  to 
be  furnished,  together  with  an  agreement  authorizing  such  official  to  collect  or 
sell  such  bonds  so  deposited  in  case  of  any  default  in  the  performance  of  any  of 
the  conditions  or  stipulations  of  such  penal  bond.  The  acceptance  of  such  United 
States  bonds  in  lieu  of  surety  or  sureties  required  by  law  shall  have  the  same 
force  and  effect  as  individual  or  corporate  sureties,  or  certified  checks,  bank 
drafts,  post-office  money  orders,  or  cash,  for  the  penalty  or  amount  of  such  penal 
bond.  The  bonds  deposited  hereunder,  and  such  other  United  States  bonds  as 
may  be  substituted  therefor  from  time  to  time  as  such  security,  may  be  deposited 
with  the  Treasurer,  or  an  Assistant  Treasurer  of  the  United  States,  a Government 
depository,  Federal  Reserve  bank,  or  member  bank,  which  shall  issue  receipt 
therefor,  describing  such  bonds  so  deposited.  As  soon  as  security  for  the  per- 
formance of  such  penal  bond  is  no  longer  necessary,  such  bonds  so  deposited, 
shall  be  returned  to  the  depositor:  Provided,  That  in  case  a person  or  persons 
supplying  a contractor  with  labor  or  material  as  provided  by  the  Act  of  Congress, 
approved  February  24,  1905  (33  Stat.,  811),  entitled  “An  Act  to  amend  an  Act 
approved  August  thirteenth,  eighteen  hundred  and  ninety-four,  entitled  ‘An  Act 
for  the  protection  of  persons  furnishing  materials  and  labor  for  the  construction 
of  public  works,’  ” shall  file  with  the  obligee,  at  any  time  after  a default  in  the 
performance  of  any  contract  subject  to  said  Acts,  the  application  and  affidavit 
therein  provided,  the  obligee  shall  not  deliver  to  the  obligor  the  deposited  bonds 
nor  any  surplus  proceeds  thereof  until  the  expiration  of  the  time  limited  by  said 
Acts  for  the  institution  of  suit  by  such  person  or  persons,  and,  in  case  suit  shall 
be  instituted  within  such  time,  shall  hold  said  bonds  or  proceeds  subject  to  the 
order  of  the  court  having  jurisdiction  thereof:  Provided  further , That  nothing 
herein  contained  shall  affect  or  impair  the  priority  of  the  claim  of  the  United 
States  against  the  bonds  deposited  or  any  right  or  remedy  granted  by  said  Acts 
or  by  this  section  to  the  United  States  for  default  upon  any  obligation  of  said 
penal  bond:  Provided  further,  That  all  laws  inconsistent  with  this  section  are 
hereby  so  modified  as  to  conform  to  the  provisions  hereof:  And  provided  further, 
That  nothing  contained  herein  shall  affect  the  authority  of  courts  over  the  security, 
where  such  bonds  are  taken  as  security  in  judicial  proceedings,  or  the  authority 
of  any  administrative  officer  of  the  United  States  to  receive  United  States  bonds 
for  security  in  cases  authorized  by  existing  laws.  The  Secretary  may  prescribe 
rules  and  regulations  necessary  and  proper  for  carrying  this  section  into  effect. 


TITLE  XIV— GENERAL  PROVISIONS 

Sec.  1400.  (a)  That  the  following  parts  of  Acts  are 

, . . hereby  repealed,  subject  to  the  limitations  provided  in  sub- 

Repeal  provisions.  division  (b)  (par  685-6g7). 

682.  (1)  The  following  titles  of  the  Revenue  Act  of  1916. 

Title  I (called  “Income  Tax”); 

Title  II  (called  “Estate  Tax”) ; 

Title  III  (called  “Munitions  Manufacturers’  Tax”),  as  amended; 

Title  IV  (called  “Miscellaneous  Taxes”). 

683.  (2)  The  following  parts  of  the  Act  entitled  “An  Act  to  provide  increased 
revenue  to  defray  the  expenses  of  the  increased  appropriations  for  the  Army  and 
Navy  and  the  extensions  of  fortifications,  and  for  other  purposes,”  approved 
March  3.  1917: 

Title  III  (called  “Estate  Tax”); 

Section  402  (called  “Returns  of  Dividends”). 

684.  (3)  The  following  titles  of  the  Revenue  Act  of  1917: 

Title  I (called  “War-Income  Tax”); 

Title  II  (called  “War  Excess-Profits  Tax”); 

Title  III  (called  “War  Tax  on  Beverages”); 

Title  IV  (called  “War  Tax  on  Cigars.  Tobacco,  and  Manufactures  Thereof”); 

90 


685 

In  force  for  assess- 
ment and  collection 
of  taxes  accrued 
thereunder. 


Title  V (called  “War  Tax  on  Facilities  Furnished  by  Public  Utilities,  and 
Insurance”) ; 

Title  VI  (called  “War  Excise  Taxes”); 

Title  VII  (called  “War  Tax  on  Admissions  and  Dues”); 

Title  VIII  (called  “War  Stamp  Taxes”); 

Title  IX  (called  “War  Estate  Tax”); 

Title  X (called  “Administrative  Provisions”); 

Title  XII  (called  “Income-Tax  Amendments”). 

(b)  Such  parts  of  Acts  shall  remain  in  force  for  the 
assessment  and  collection  of  all  taxes  which  have  accrued 
thereunder,  and  for  the  imposition  and  collection  of  all 
penalties  or  forfeitures  which  have  accrued  and  may  accrue 
in  relation  to  any  such  taxes,  and  except  that  the  unex- 
pended balance  of  any  appropriation  heretofore  made  and 
now  available  for  the  administration  of  any  such  part  of  an  Act  shall  be  available 
for  the  administration  of  this  Act  or  the  corresponding  provision  thereof:  Pro- 
vided, That,  except  as  otherwise  provided  in  this  Act,  no  taxes  shall  be  collected 
under  Title  I of  the  Revenue  Act  of  1916  as  amended  by  the  Revenue  Act  of  1917, 
or  Title  I or  II  of  the  Revenue  Act  of  1917,  in  respect  to  any  period  after  December 
31,  1917:  Provided  further,  That  the  assessment  and  collection  of  all  estate  taxes 
and  the  imposition  and  collection  of  all  penalties  or  forfeitures,  which  have 
accrued  under  Title  II  of  the  Revenue  Act  of  1916  as  amended  by  the  Act  entitled 
“An  Act  to  provide  increased  revenue  to  defray  the  expenses  of  the  increased 
appropriations  for  the  Army  and  Navy  and  the  extensions  of  fortifications,  and 
for  other  purposes,”  approved  March  3,  1917,  or  Title  IX  of  the  Revenue  Act  of 
1917,  shall  be  according  to  the  provisions  of  Title  IV  of  this  Act  {par.  287-322 ). 

In  the  case  of  any  tax  imposed  by  any  part  of  an  Act 
. rr  .•  herein  repealed,  if  there  is  a tax  imposed  by  this  Act  in 

Tji  axtSije  lieu  thereof,  the  provision  imposing  such  tax  shall  remain 

u tii  ew  ta  e e e t.  jn  force  un^ii  the  corresponding  tax  under  this  Act  takes 
effect  under  the  provisions  of  this  Act. 

Title  I of  the  Revenue  Act  of  1916  as  amended  by  the 
P P and  P I in-  Revenue  Act  °f  1917  shall  remain  in  force  for  the  assess- 
come  taxes  ' 1 rnent  and  collection  of  the  income  tax  in  Porto  Rico  and 

the  Philippine  Islands,  except  as  may  be  otherwise  pro- 
vided by  their  respective  legislatures. 

Sec.  1401.  That  section  1100  of  the  Revenue  Act  of 
1917  is  hereby  repealed,  to  take  effect  on  July  1,  1919,  and 


thereafter  the  rate  of  postage  on  all  mail  matter  of  the  first 


Effective  July  1, 

rficc  °n  *St  class  shall  be  the  same  as  the  rate  in  force,  on  October  2, 

1917:  Provided,  That  letters  written  and  mailed  by  sol- 
diers, sailors,  and  marines  assigned  to  duty  in  a foreign  country  engaged  in  the 
present  war  may  be  mailed  free  of  postage,  subject  to  such  rules  and  regulations 
as  may  be  prescribed  by  the  Postmaster  General. 

689.  Section  1107  of  such  Act  is  hereby  repealed,  to  take  effect  July  11,  1919. 

Sec.  1402.  That  if  any  clause,  sentence,  paragraph,  or 
part  of  this  Act  shall  for  any  reason  be  adjudged  by  any 
court  of  competent  jurisdiction  to  be  invalid,  such  judg- 
ment shall  not  affect,  impair,  or  invalidate  the  remainder 
of  this  Act,  but  shall  be  confined  in  its  operation  to  the 
clause,  sentence,  paragraph,  or  part  thereof  directly  involved  in  the  controversy 
in  which  such  judgment  has  been  rendered. 

691.  Sec.  1403.  That  the  Revenue  Act  of  1916  is  hereby  amended  by  adding 
at  the  end  thereof  a section  to  read  as  follows: 

“Sec.  903.  That  this  Act  may  be  cited  as  the  ‘Revenue  Act  of  1916.’  ” 

692.  Sec.  1404.  That  the  Revenue  Act  of  1917  is  hereby  amended  by  adding  at 
the  end  thereof  a section  to  read  as  follows: 

“Sec.  1303.  That  this  Act  may  be  cited  as  the  ‘Revenue  Act  of  1917.’  ” 


690. 

Portions  of  Act  ad- 
judged invalid  not  to 
affect  remainder. 


693. 

Title  of  Act. 

694. 

$60  paid  armed 
forces  resigned  or 
honorably  discharged. 


Sec.  1405.  That  this  Act  may  be  cited  as  the  “Reve- 
nue Act  of  1918.” 

Sec.  1406.  That  all  persons  serving  in  the  military  or 
naval  forces  of  the  United  States  during  the  present  war 
who  have,  since  April  6,  1917,  resigned  or  been  discharged 
under  honorable  conditions  (or,  in  the  case  of  reservists, 
been  placed  on  inactive  duty),  or  who  at  any  time  here- 

91 


after  (but  not  later  than  the  termination  of  the  current  enlistment  or  term  of 
service)  in  the  case  of  the  enlisted  personnel  and  female  nurses,  or  within  one 
year  after  the  termination  of  the  present  war  in  the  case  of  officers,  may  resign  or 
be  discharged  under  honorable  conditions  (or,  in  the  case  of  reservists,  be  placed 
on  inactive  duty),  shall  be  paid,  in  addition  to  all  other  amounts  due  them  in 
pursuance  of  law,  $60  each. 

This  amount  shall  not  be  paid  (1)  to  any  person  who 


695. 


not 


though  appointed  or  inducted  into  the  military  or  naval 


forces  on  or  prior  to  November  11,  1918,  had  not  reported 


To  whom 

payable.  £or  ^ty  at  his  station  on  or  prior  to  such  date;  or  (2)  to 

any  person  who  has  already  received  one  month’s  pay  under  the  provisions  of 
Section  9 of  the  Act  entitled  “An  Act  to  authorize  the  President  to  increase 
temporarily  the  military  establishment  of  the  United  States,”  approved  May  18, 
1917;  or  (3)  to  any  person  who  is  entitled  to  retired  pay;  or  (4)  to  the  heirs  or 
legal  representatives  of  any  person  entitled  to  any  payment  under  this  section 
who  has  died  or  may  die  before  receiving  such  payment.  In  the  case  of  any 
person  who  subsequent  to  separation  from  the  service  as  above  specified  has 
been  appointed  or  inducted  into  the  military  or  naval  forces  of  the  United  States 
and  has  been  or  is  again  separated  from  the  service  as  above  specified,  only  one 
payment  of  $60  shall  be  made. 

The  above  amount,  in  the  case  of  separation  from  the 
When  and  how  serv*ce  on  or  Pri°r  to  the  passage  of  this  Act,  shall  be  paid 
• i as  soon  as  practicable  after  the  passage  of  this  Act,  and 

P ’ in  the  case  of  separation  from  the  service  after  the  passage 

of  this  Act  shall  be  paid  at  the  time  of  such  separation. 

697.  The  amounts  herein  provided  for  shall  be  paid  out  of  the  appropriations 
for  “pay  of  the  army”  and  “pay  of  the  navy,”  respectively,  by  such  disbursing 
officers  as  may  be  designated  by  the  Secretary  of  War  and  the  Secretary  of  the 
Navy. 

693.  The  Secretary  of  War  and  the  Secretary  of  the  Navy  respectively  shall 
make  all  regulations  necessary  for  the  enforcement  of  the  provisions  of  this 
section. 


699. 

Laws  relating  to 
intoxicating  liquors  in 
interstate  commerce 
applicable  to  D.  C. 


700. 

Contracts  with 
U.  S. 


Sec.  1407.  That  the  provisions  of  Section  5 of  the 
Act  entitled  “An  Act  making  appropriations  for  the  service 
of  the  Post  Office  Department  for  the  fiscal  year  ending 
June  30,  1918,  and  for  other  purposes,”  approved  March  3, 
1917,  relating  to  intoxicating  liquors  in  interstate  com- 
merce, as  amended  by  section  1110  of  an  Act  entitled  “An 
Act  to  provide  revenue  to  defray  war  expenses,  and  for  other  purposes,”  approved 
October  3,  1917,  be,  and  the  same  are  hereby,  made  applicable  to  the  District 
of  Columbia. 

Sec.  1408.  That  every  person  who  on  or  after  April 
6,  1917,  has  entered  into  any  contract,  undertaking,  or 
agreement  with  the  United  States,  or  with  any  depart- 
ment, bureau,  officer,  commission,  board,  or  agency  under 
the  United  States  or  acting  in  its  behalf,  or  with  any  other  person  having  con- 
tract relations  with  the  United  States,  for  the  performance  of  any  work  or  the 
supplying  of  any  materials  or  property  for  the  use  of  or  for  the  account  of  the 
United  States,  shall,  within  thirty  days  after  a request  of  the  Commissioner 
therefor,  file  with  the  Commissioner  a true  and  correct  copy  of  every  such  con- 
tract, undertaking,  or  agreement. 

701.  Whoever  fails  to  comply  with  such  request  of  the  Commissioner  shall  be 
guilty  of  a misdemeanor  and  shall  be  punished  by  a fine  of  not  more  than  $1,000, 
or  by  imprisonment  for  not  more  than  one  year,  or  both. 

702.  The  Commissioner  shall  (when  not  violate  of  the  technical  military  or 
naval  secrets  of  the  Government)  have  access  to  all  information  and  data  relating 
to  any  such  contract,  undertaking,  or  agreement,  in  the  possession,  control  or 
custody  of  any  department,  bureau,  board,  agency,  officer  or  commission  of  the 
United  States  and  may  call  upon  any  such  department,  bureau,  board,  agency 
officer  or  commission  for  a full  statement  and  description  of  any  allowance  for 
amortization,  obsolescence,  depreciation  or  loss,  or  of  any  valuation,  appraisal, 
adjustment  or  final  settlement,  made  in  pursuance  of  any  such  contract,  under- 
taking, or  agreement. 

Sec.  1409.  That  unless  otherwise  herein  specially  pro- 
vided, this  Act  shall  take  effect  on  the  day  following  its 
passage. 


703. 

When  Act  effective. 


92 


ALPHABETICAL  INDEX 


PAR. 

Absconding  to  defeat  tax,  proceedings 


against  193 

Academies,  riding,  special  tax  on  532 

Accident,  compensation  for,  excluded  from 

taxation  56 

Accounting  period,  change  of  47 

Change  of,  method  of  computing  income.. 119 
Accumulating  companies  to  avoid  surtax, 

stockholders  made  taxable  101 

Act  effective,  date  of  703 

Acts  extended  641 

Adjustment  of  corporation  tax  280-284 

Administering  drugs,  tax  on  555 

Admission,  definition  of  452 

Excess  rates  charged  for,  tax  on 447-448 

Free,  tax  on  446 

Paid,  tax  on  445 

Price  of,  to  be  printed  on  ticket 453 

Tax  on,  collection  and  payment  455 

Tax  on,  exemptions  from  451 

Advisory  Tax  Board  631-635 

Agent,  when  return  may  be  made  by 115 

Agents,  internal  revenue-leave  of  absence 

for  636 

Amendments  to  the  drug  act  551-569 

Amortization,  amount  of,  deductible  from 

gross  income  70 

Deductible,  of  corporations  156 

Alcohol,  ethyl,  see  Ethyl  alcohol 

Export,  may  be  handled  in  tanks  or  tank 

cars  401 

Alcoholic  content  in  natural  wines  374 

Non-intoxicating  beverages  408 

Still  wines  375-379 

Alien,  resident,  credit  for  foreign  taxes.  110-1 1 1 


Deductions  from  gross  income  of 74 

Distraint  of  property  86 

Gross  income  of  when  taxable  60 

Income  of,  when  taxable  60 

Payment  of  tax  on  incomes  of  at  source..  102 

Personal  exemption  86 

Return  essential  to  deductions  and  credits.  86 


Allowance  on  account  of  shortage  or  rebates, 

claim  for  73 

For  loss  of  wines  398 

On  distilled  spirits  after  removal  of  pro- 
hibition   350 

Annuities,  proceeds  of,  excluded  from  taxa- 
tion   51-52 

Apparatus,  installation  of  distilleries,  brewer- 
ies and  rectifying  houses 370 

Appeal  from  alleged  under-statements  of 

returns 123 

Application  of  rate  for  1917-18  35 

Of  rate  for  1918-19  37 

Appropriation  for  legislative  drafting  service.  .639 

Art,  objects  of,  excise  tax  on  481 

Assessment,  collection  by,  of  tax  on  wines  ..395 

Of  difference  of  value  of  stamps  655 

Assistant  to  Commissioner  of  Internal  Rev- 
enue   628 

Treasurers,  stamps  for  590 

Attestation  of  corporate  returns  174 

Attorney,  powers  of,  stamp  tax  on  605 

Automobiles,  excise  tax  on  458-459 

Rented,  special  tax  on  533 

Trucks,  excise  tax  on  457 

Average  income,  determination  of 270-274 

Invested  capital 263-264 

Avoidance  of  excise  tax  by  collateral  bargains, 

provisions  against  480 

Of  tax  at  source  103 

Bargains,  collateral,  with  reference  to  child 

labor  tax  618 

To  avoid  excise  tax,  provisions  against  . .480 

Basis  of  inventories  31 

Materials  in  distillation  399-400 


Beer,  tax  on  371 

Withdrawal  of  for  bottling  405-406 

Beneficiary,  distributive  share  of,  statement  of 

required  98 

Tax  payment  by  99 

Beneficiaries  of  estates,  liable  for  tax  ......320 

Benefits,  local,  assessment  for,  not  deductible 

from  gross  income  64 

Bequests  excluded  from  taxation  53 

Beverage,  non-alcoholic,  return  and  payment 

of  tax  410-411 

Non-alcoholic,  tax  on  ..407-409 

Tax  extended  during  prohibitive  period  ..349 

Billiard  rooms,  special  tax  on  530 

Binoculars,  excise  tax  on  507 

Blending  of  wines  396 

Boats,  excise  tax  on  476 

Special  tax  on  544-547 

Bond  covering  wines  in  possession  ...388 

To  keep  beverage  distilled  spirits  during 

prohibition  period  349 

Bonded  period  for  distilled  spirits  extended 

during  prohibition  _ 351 

Premises,  location  of  wines  creates 388 

Bonds,  indemnity,  stamp  tax  on  592 

Of  indebtedness,  stamp  tax  on 592 

Surety,  stamp  tax  on  ....592 

United  States,  acceptable  in  lieu  of  sureties,  680 
Bone-dry  provision  for  District  of  Columbia.  . 699 

Bonus,  military  694-698 

Borrowed  capital  defined  252 

Bottling,  withdrawal  of  beer  for 405-406 

Bowling  alleys,  special  tax  on  530 

Breweries,  installation  of  apparatus  in  ....370 
Removal  of  fermented  liquors  to  distil- 
leries   372-373 

Brokers,  returns  of  198 

Special  tax  on  523 

Brokers’  transactions  exempt  from  tax  595 

Building  and  loan  associations  exempt  from 

corporate  tax  132 

Stocks  and  bonds  exempt  from  instru- 
ment tax  574 

Business  associations  exempt  from  corporate 

tax  135 


Cabarets,  tax  on  450 

Calendar  year,  rate  for  applied  in  case  of 

dividend  returns  119 

Cameras,  excise  tax  on  463 

Cancellation  of  stamps  585 

Candy,  excise  tax  on  465 

Canning  clubs  exempt  from  tax  on  child 

labor  611 

Capital  stock,  issue  of,  stamp  tax  on 593-594 

Transfer,  of,  stamp  tax  on  595 

Carbonated  water,  tax  on  408 

Carpets,  excise  tax  on  485 

Carriers,  to  collect  transportation  tax  . .336-338 

Cash  fare  tax  333 

Sales  of  produce  exempt  from  stamp  tax.  ..597 

Casualty  insurance,  tax  on  344 

Cemetery  companies  exempt  from  corporate 

tax 133 

Certificates  of  indebtedness,  United  States, 

receivable  for  taxes  663 

Relating  to  child  labor  619-621 

Champagne,  tax  on  382 

Charitable  corporations  exempt  from  corporate 

tax  134 

Chautauquas  exempt  from  special  tax  529 

Checks,  uncertified,  receivable  for  taxes  ....663 

Stamp  tax  on  598 

Chewing  gum,  tax  on  462 

Child  labor  employment  in  good  faith  and  on 

certificate,  exempt  from  tax  619-621 

Tax,  collateral  bargains  with  reference  of,  618 

Computation  of  net  profits  for  612-617 

Taxable  611 


93 


PAR. 


PAR. 


Cigars,  determination  of  taxable  price  418 

Floor  tax  on 426 

Manufacturers  of,  special  tax  on 540-541 

Tax  on  414-415 

Cigarette  Packages  420 

Paper,  tax  on 427-428 

Cigarettes,  floor  tax  on  426 

Manuafcturers  of,  special  tax  on  542 

Tax  on  416-417 

Circuses,  special  tax  on  528 

Citations  of  present  and  past  acts 691-693 

Civic  leagues,  exempt  from  corporate  tax  . . . .136 
Claim  for  allowance  on  account  of  shrinkage 

or  rebates  73 

Classifications  to  be  published  205 

Clearing  house  operations  exempt  from  stamp 

tax 596 

Clocks,  excise  tax  on  507 

Club  memberships,  tax  on  454 

Coca  leaves,  exhausted,  exempt  from  tax  . . . 569 

Tax  on  561 

Collateral,  deposit  of,  exempt  from  tax  ....595 
Bargains,  with  reference  to  child  labor  tax,  618 
To  avoid  payment  of  excise  tax,  pro- 
visions against  480 

Collection  of  back  taxes,  repeal  provisions  to 

remain  in  force  for  685-686 

At  Source,  information  for  199-202 

Of  tax  on  admissions  and  dues  455 

Of  taxes — discretionary  methods  645 

Of  transportation  tax  336-338 

Collections,  unauthorized,  repayment  of  ....  665 

Foreign,  license  required  for  206 

Collector,  returns  by  673 

Internal  Revenue,  power  to  enter  other 

districts  672 

Power  to  summon  witnesses  672 

Salaries  of  . .. 629 

Combined  insurance  policies,  tax  on  342 

Commissioner,  copies  of  Government  contracts 

to  be  furnished  to 700-702 

To  procure  and  regulate  use  of  adhesive 

stamps  586 

Of  Internal  Revenue,  examination  by,  for 

returns  643 

When  to  assess  tax  675 

Salary  of 627 

Committee  on  destruction  of  forfeited  drugs  . .571 
Common  carrier,  when  exempt  from  transpor- 
tation tax  334 

Compensation  acts,  workmen’s  receipts  under, 

excluded  from  taxation  56 

For  accident,  excluded  from  taxation  ....  56 
Competition,  foreign,  in  passenger  transpor- 
tation, provision  to  meet 326 

Computations,  separate,  for  corporations  per- 
mitted   226 

Concealment  to  defeat  tax,  proceedings 

against  193 

Concert  halls,  special  tax  on  527 

Consolidated  returns  of  corporations  ....177-180 
Consolidation  of  corporations,  definition  of  ..179 
Contracts,  Government,  copies  of,  to  be  fur- 

nihed  to  commissioner  700-702 

For  stamps  limited  587 

Contributions  deductible  from  gross  income  . . 72 

To  estates  tax  318 

Co-operative  banks  exempt  from  corporate 

. tax  132 

Building  and  Loan  Association  stocks  and 
bonds  exempt  from  instrument  tax  . . . .574 

Corporation,  adjustment  of  tax 280-284 

Corporations  not  in  business  previous  year  ex- 
empt from  special  tax  519-520 

Consolidated,  definition  of  179 

Consolidated  returns  177-180 

Character  of,  a holding  or  accumulating 

companies,  how  determined  101 

Credits  allowed  to  165-168 

Credit,  excess  profits  tax 243 

Credit  for  taxes  170-173 

Credits  on  war  profits  tax  232-242 

Defined  2 

Domestic,  defined  3 

Special  tax  on  516 


94 


Corporations,  exemptions  from  war  profits 


and  excess  profits  tax 227-229 

Expenses  not  deductible  164 

Foreign,  special  tax  on  517 

Gross  income  defined  144-147 

Net  income,  war  profits  and  excess  profits 

tax  245-249 

Payment  of  foreign  taxes 180 

Personal  service,  definition  19 

Stockholders  of  taxed,  as  partners 92 

Reorganization  of  275-279 

Determination  of  gain  or  loss 30 

When  no  gain  or  loss  deemed  to  occur..  29 

Returns  174-176 

Time  and  place  for  filing 181-182 

Separate  computations  permitted  226 

Tax  on  124-126 

Exceptions  to  128-142 

War  and  excess  profits  tax  on  212-223 

Corporate  returns,  war  and  excess  profits  tax,  285 

Securities,  stamp  tax  on  591 

Cordials,  floor  tax  on  386 

Tax  on  384 

Credits  allowed  on  normal  tax  80-85 

To  corporations  165-168 

Corporate,  on  war  profits  tax  232-242 

Excess  profits  tax  243-244 

Of  members  of  partnerships  88 

For  prior  payment  36 

Sales,  payment  of  tax  653 

For  tax  paid  on  boats 548-549 

For  taxes 107-113 

For  taxes  allowed  corporations  170-173 

For  taxes,  redetermination  of  112-113 

Cruelty  to  animals,  corporations  for  preven- 
tion of,  exempt  from  corporate  tax  ...134 
To  children,  corporations  to  prevent,  exempt 

from  corporate  tax  134 

Customers  of  brokers,  names  to  be  returned,  198 

Customhouse  brokers,  tax  on  526 

Operations,  stamp  tax  on  601-602 

Date,  effective  of  act  703 

Dealing  in  drugs,  registration  required 

for  552-554 

Tax  on . 555 

Debts,  deductible,  of  corporations  153 

From  gross  income  68 

Deduction  allowed  estates 98 

Deductions  for  estates  298-302 

Allowed  from  gross  income  61-74 

Etc.,  to  be  published  205 

Deeds  of  conveyance,  stamp  tax  on  600 

Deferred  installments  of  taxes  183 

Definition  of  admission  452 

Of  borrowed  capital  252 

Of  consolidation  of  corporations  179 

Of  corporation  2 

Of  dividend  21 

Of  domestic  corporation  3 

Relating  to  drugs  act  556-558 

Of  executor  287 

Of  fiduciary  17 

Of  foreign  corporation  4 

General  1-15 

Of  Government  contracts  12 

Of  gross  income  49 

Of  gross  income  of  corporation  144-147 

Of  admissible  assets  253 

Income  tax  16-20 

Of  intangible  property  250 

Of  invested  capital  255-258 

Of  military  forces  13 

Of  natural  wines 374 

Of  net  income  45 

Of  net  income  of  corporations  143 

Of  “Paid”  20 

Of  par  value  254 

Of  person  1 

Of  personal  service  corporation  19 

Of  tax  on  pipe  lines  335 

Of  pre-war  period  231 

Of  tangible  property  251 

Of  taxable  year  16 

Of  present  war  14 

War  profits  and  excess  profits  tax 211 

Of  wine  spirits  391 

Of  withholding  agent 18 


PAR. 

Delay  in  paying  taxes,  penalty  for  190 

Denaturing  ethyl  alcohol,  removal  for  358 

Depletion,  cost  of  restoration  of,  not  deduct- 
ible from  gross  income  78 

Deductible,  of  corporations  157 

Of  natural  deposits,  deduction  of,  from 

gross  income  71 

Depreciation,  deductible,  of  corporations. ...  155 

Deductible  from  gross  income  69 

Cost  of  restoration  of,  not  deductible  from 

gross  income  78 

Deposit  of  collateral,  exempt  from  tax  ....595 

Depositaries,  stamps  for  590 

Deputy  Commissioners  of  Internal  Revenue,  628 
Descent,  property  acquired  by,  excluded  from 

taxation  53 

Determination  of  average  income 270-274 

Of  character  of  corporations  as  holding  or 

accumulating  companies  101 

Of  invested  capital  265-269 

Of  taxable  price  of  cigars  and  cigarettes  . .418 
Devises,  property  acquired  by,  excluded  from 

taxation  53 

Disclosing  information,  penalty  for 670 

Discontinuance  of  stamps  368-369 

Discretionary  method  of  collection  of  taxes  ..645 
Discrimination  forbidden  against  materials 
producing  rectified  distilled  spirits  or 

wines  364 

Dispensing  drugs,  officials  engaged  in,  not 

required  to  register  or  pay  tax  558 

Tax  on  555 

Distillation,  basis  of  materials  in  399-400 

Filtration  aeration  process,  exception  in 

favor  of  399-400 

Fruit,  use  of  sugar  in  402-403 

Distillers,  fruit,  exemption  in  favor  of  ..402-403 
Distilleries  may  bottle  gin  in  bond  for  export. 404 
Removal  of  fermented  liquors  to,  from 

breweries  372-373 

Installation  of  apparatus  in  370 

Distilled  spirits,  bond  to  keep,  during  pro- 
hibition period  349 

Bonded  period  for,  extended  during 

prohibition  351 

Rectified,  floor  tax  on  361 

Rectified,  tax  on  360 

Distraint,  property  alien  non-resident  86 

Distribution  of  earnings  and  profits  22 

How  taxed  25 

When  a dividend  • 21 

Distributive  share  of  beneficiary,  statement  of 

required 98 

From  partnership  116 

Of  partnerships  in  computing  income  . . 87 
District  of  Columbia,  bonds,  etc.,  issued  by, 

exempt  from  instrument  tax  574 

Bone-dry  provision  for  699 

Ditch  companies,  mutual,  stock  and  bonds, 

exempt  from  instrument  tax  574 

Dividend,  credit  for,  on  normal  tax 81 

Deductible,  of  corporations  154 

Definition  of  21 

Regulations  regarding  21-25 

Documents  making,  etc.,  without  payment  of 

tax,  penalty  for  575-579 

Domestic  corporation  defined 3 

Special  tax  on  516 

Drafting  service,  legislative,  appropriation  for,  639 

Legislative,  created  637 

Legislative,  duties  of  638 

Drafts,  stamp  tax  on  598 

Drug  act,  amendments  to  551-567 

Drugs,  forfeited,  committee  on  destruction 

of  571 

To  be  turned  over  to  federal  authorities,  571 
Forfeiture  of  non-stamped  packages  of  ..565 

Maximum  non-taxed  narcotic  content  569 

Personal  custody  of  ...i 563 

Professional  use  of  563 

Records  and  returns  rating  to  566 

Regulation  for  stamps  on  563 

Under  seizure,  forfeiture  after  convic- 
tion   570-571 

Dues,  tax  on,  collection  and  payment  of  . . . .455 


PAR. 

Duty  of  employees  with  regard  to  payment  of 

tax  649 

Duties  of  legislative  drafting  service  638 

Earnings  and  profits,  distribution  of  22 

Distribution  of,  how  taxed  25 

Educational  corporations  exempt  from  cor- 
porate tax  134 

Effective  date  of  Act 703 

Eight  per  cent,  gross  normal  tax  after  1918,  42 

Electric  fans,  portable,  excise  tax  on  469 

Employment  of  child  labor  exempt  from  tax 

under  certificate  619-621 

Employees  of  dealers  in  drugs  not  required 

to  register  558 

Duty  in  regard  to  payment  of  tax  649 

Endowment  policies,  proceeds  of,  excluded 

from  taxation  51-52 

Estate,  rate  of  tax  on  289 

Of  soldiers  and  sailors  when  exempt  from 

tax  290 

Tax,  beneficiaries  liable  for  320 

Tax,  contribution  to  318 

Deductions  for  298-302 

Exemption  for  303 

Gross  valuation  of  291-297 

Lien  on,  for  tax  319 

Of  non-resident  304-308 

Tax,  overdue  317 

Tax,  receipts  for  316 

Tax,  penalty  for  failure  to  comply  with 

provisions 321-322 

Tax  on,  redetermination  of  310 

Tax,  regulations  for  93-100 

Tax,  reimbursement  for  amount  paid  on  . .318 

Tax,  transferees  liable  for  320 

Returns  by  collectors  313 

Tax,  when  due  314 

Estimate  for  reimbursement  of  refunds 666 

Ethyl  alcohol,  exemptions  in  favor  of  . ...356-357 

Removal  for  denaturing  358 

Evasion  of  tax,  penalty  for  196 

Examination,  for  returns  by  Commissioner,  643 
Excess  profits,  corporation,  tax  on  . — 212-223 

Tax,  net  income  245-249 

Tax  not  deductible  from  gross  income  . . 64 

Tax,  credit  on  243-244 

Tax,  limitation  on  225 

Excise  tax  (see  tax,  excise) 

Exchange  of  property,  determination  of  gain 

or  loss  29 

Sales  of  produce,  stamp  tax  on 596 

Of  wholesale  liquor  dealers  and  rectified 

spirits  stamps  367 

Exclusion  of  items  of  income  from  taxation,  50-59 

Exceptions  to  special  tax 529 

From  instrument  tax  574 

To  tax  on  rectified,  spirits  and  wines 363 

Executor,  definition  of  287 

To  notify  collector  of  appointment  311 

Payment  of  tax  by  315 

Returns  by  312 

Exemptions  from  tax  on  admissions  451 

Of  canning  clubs  from  tax  on  child  labor,  611 
From  child  labor  tax  under  certificate,  619-621 
Of  clearing  house  operations  from  stamp 

tax  596 

Of  common  carrier  from  transportation  tax,  334 

For  estates  303 

Of  exhausted  coca  leaves  from  tax  569 

In  favor  of  fruit  distillers  402-403 

From  insurance  tax  345 

From  normal  tax  for  dependent  84 

Personal,  alien  non-resident  86 

From  normal  tax  83 

From  punishment  or  penalty,  not  to  be 

through  payment  of  special  tax 535 

From  war  profits  and  excess  profits  tax,  227-229 
For  less  than  twelve  months,  war  profits 

tax  230 

Exhibitions,  public,  special  tax  on  529 

Existing  stamps,  difference  in  value  to  be 

assessed  655 

May  be  used 655 


95 


PAR. 

Expense  deductible  from  gross  income  ....  62 

Deductible,  of  corporations  149 

Not  deductible,  corporations  164 

Export  alcohol  may  be  handled  in  tank  cars  . .401 
Articles,  remission  of  internal  revenue  tax 

on  653 

Gin,  bottling  in  bond  404 

Express  shipments,  tax  on  325 

Extension  of  time  of  payment  of  floor  tax  . . 644 
For  returns  674 


Failure,  negligent,  to  pay  tax,  penalty  for  ..646 


Willful,  to  pay  tax,  penalty  for  647-648 

Fairs,  industrial  or  agricultural,  exempt  from 

special  tax  529 

Family  expenses  not  deductible  from  gross 

income  76 

Wines  exempt  from  tax 388 

Fans,  excise  tax  on  492 

Farm  loan  securities,  excluded  from  taxation,  54 
Farmers  exempt  from  leaf  tobacco  regula- 
tions   443 

Federal  officials  made  taxable  49 

Fermented  liquors,  removal  of,  from  brew- 
eries to  distilleries  372-373 

Fiduciary,  definition  of  17 

Responsible  for  return  98 

Return  by  117 

Tax  payment  by  99 

Field  glasses,  excise  tax  on  507 

Film§,  motion  picture  (see  motion  picture 

films)  510 

Filtration,  aeration  process,  exception  in 

favor  of  399-400 

Firearms,  excise  tax  on  466 

Fire  insurance,  tax  on  343 

Fittings,  precious  metal,  for  personal  use, 

excise  tax  on  507 

Floor  tax  on  cigars,  cigarettes,  tobacco  and 

snuff  426 

On  Distilled  spirits  359 

On  rectified  spirits  and  wines  361 

On  still  and  sparkling  wines  386 

On  sweet  wines  387 

Return  and  payment  under  644 

Footwear,  excise  tax  on  498 

Foreign  collections,  license  required  for  ....206 

Competition  in  passenger  transportation, 

provision  to  meet  326 

Corporation,  deductions  allowed  to 163 

Defined  4 

Not  entitled  to  specific  exemption,  war 

excess  profits  tax  242-244 

Excluded  from  personal  service  class  . . 19 

Gross  income  of  147 

Payment  of  tax  at  source  ...169 

Governments,  bonds,  etc.,  issued  by,  exempt 

from  instrument  tax  574 

Income  of,  excluded  from  taxation  ....  55 

Passage  tickets,  stamp  tax  on  603 

Taxes,  credit  for  108 

Paid  by  corporations  180 

Written  insurance  policies,  when  taxable  .341 

Forfeiture  of  drugs  under  seizure  570-571 

Of  non-stamped  packages  of  drugs  565 

Fortification  of  wines  396 

Of  sweet  wines  390-392 

Withdrawal  of  wine  spirits  for  380 

Four  per  cent,  tax  on  first  four  thousand 

dollars  after  1918  42 

Fractional  part  of  a cent,  computation  of  ..662 
Fraud,  clearance  of,  required  to  secure 

refund  666 

In  tax  payment,  penalty  for  187 

Free  admissions,  tax  on  446 

Freight,  tax  on  324 

Fruit  distillers,  exemption  in  favor  of  . .402-403 

Distilleries,  gaugers  and  storekeepers  397 

Meters,  etc.,  required  397 

Distillation,  use  of  sugar  in  402-403 

Furs,  excise  tax  on  475 

Gain,  how  ascertained  26-30 

Gas  wells,  taxable  selling  price  of  44 

Gaugers  for  fruit  distilleries  397 

General  definitions  1-15 

Gifts  deductible  from  gross  income  72 

Excluded  from  taxation  53 


PAR. 


Gin  exempt  from  tax  on  rectified  spirits  ....360 

For  export,  bottling  in  bond  404 

Ginger  Ale,  tax  on 408 

Gold  mining,  by  corporation,  exempt  from  war 

profits  and  excess  profits  tax  229 

Government  income  excluded  from  taxation  . . 57 
Contracts,  copies  of,  to  be  furnished  Com- 
missioner   700-702 

Defined  12 

Governmental  interest,  credit  for,  normal  tax,  82 
Obligations,  interest  on,  excluded  from 

taxation  54 

Telephone  and  telegraph  business  exempt 
from  tax  331 


Governmentally  directed  utilities,  income  of, 


when  excluded  from  taxation  58 

Grains,  basis  of,  for  distillation  399-400 

Grape  juice,  tax  on 408 

Must,  addition  of,  to  wine  392 

Gross  income  (see  income,  gross) 

Group  insurance,  tax  on  342 


Hand  bags,  excise  tax  on  489 

Baggage,  excise  tax  on  488 

Health  insurance,  proceeds  of,  excluded  from 

taxation  56 

Hearing  on  under-statement  in  returns  ....123 

Hire,  transportation  for,  tax  on  334 

Holding  companies  to  avoid  surtax,  stockhold- 
ers made  taxable  101 

Corporations  exempt  from  corporate  tax  ..140 

House  jackets,  tax  on  493 

Husband  and  wife  exemption  from  normal 

tax  83 


Ice  cream,  tax  on  412 

Importation  of  beverage  spirits  limited  . — 353 
Of  taxed  article  without  payment  pen- 
alized   577-579 

Improvements,  permanent,  cost  of,  not  deduct- 
ible from  gross  income  77 

Inquiry  as  to  taxable  assets  671 

Inadmissible  assets  defined  253 

Income,  average,  determination  of .270-274 

Of  citizens  of  United  States  possessions, 

how  taxed  207 

Of  foreign  governments  excluded  from 

taxation  55 

Of  Government-directed  utilities,  when  ex- 
cluded from  taxation  58 

Governmental,  excluded  from  taxation  . . 57 
Gross,  assessment  for  local  benefits,  not 

deductible  from  64 

Deductions  allowed  from 61-74 

Of  non-resident  aliens,  when  taxable  ...  60 

Corporation,  defined  144-147 

Defined  49 

Items  not  deductible  from  75-79 

Items  of,  excluded  from  taxation  50-59 

Made  taxable  49 

Net  45-47 

How  computed 46 

Of  corporation,  defined  143 

Defined  45 

One  thousand  dollars,  single  person’s  ex- 
emption from  normal  tax  83 

Parts  of,  rates  for  different  years 39 

Two  thousand  dollars,  husband  and  wife 

exemption  from  normal  tax  83 

For  war  profits  and  excess  profits  tax  . .245-249 
Tax,  collection  in  Porto  Rico  and  Philippine 

Islands  208-210 

Definitions  of  16-20 

First  four  thousand  dollars,  income,  six 

per  cent,  normal  tax,  1918  41 

Not  deductible  from  gross  income  ....  64 
Four  per  cent,  on  first  four  thousand 

dollars  after  1918  42 

Eight  per  cent,  gross  after  1918 42 

Twelve  per  cent,  gross,  1918  41 

Increase  of  price  under  pretext  of  taxation, 

penalty  for  679 

Indebtedness,  bonds  of,  stamp  tax  on  591 

Indemnity  bonds,  certain,  to  United  States, 

exempt  from  instrument  tax  574 

Stamp  tax  on  592 


96 


PAR. 


Industrial  insurance,  tax  on  342 

Information  for  collection  at  source  ....  199-202 

Penalty  for  disclosing 670 

Inland  insurance,  tax  on  343 

Inspectors,  internal  revenue,  leave  of  absence 

for  636 

Installments  of  taxes,  interest  on  183 

Insurance,  by  domestic  company,  part  of  non- 
resident decedent  gross  estate  309 

Health,  proceeds  of,  excluded  from  taxa- 
tion   56 

Life,  beneficial,  premiums  on  not  deductible 

from  gross  income  79 

Companies,  deductions  allowed  to 158-161 

Mutual,  subjected  to  special  tax. ..  .519-520 
Reserve  of,  exempt  from  special  tax  ...518 

Policies,  combined,  tax  on  342 

Taxable  on  issue  341 

Transactions,  stamp  tax  on  609 

Tax  on  341-345 

Penalty  for  non-payment  of  347 

Returns  of  346 

Intangible  property  defined  250 

As  part  of  invested  capital  259-260 

Interest,  credit  to  corporations  166 

Deductible,  of  corporations  150 

Governmental,  credit  for,  normal  tax  ....  82 
On  Governmental  obligations,  excluded  from 

taxation  54 

Internal  Revenue,  Advisory  Tax  Board  ..631-635 

Assistants  to  Commissioner  628 

Authority  to  administer  oaths  669 

Collector’s  power  to  enter  other  districts. 672 

Deputy  Commissioners  of  628 

Repeal  provisions  relating  to  572 

Salaries  of  Collectors  629 

Inventory,  basis  of  31 

Basis  of  gain  or  loss  28 

Invested  capital,  average  263-264 

Deductions  from  261-262 

Defined  255-258 

Determination  of  270-273 

Valuation  of  intangible  capital  259-260 

Investments,  tax  guaranteed,  tax  on  103 

Irrigation  companies,  mutual,  exempt  from 

instrument  tax  574 


Issuance,  insurance  policies  made  taxable  on  341 


Jewelry,  excise  tax  on  507 

Joint  fiduciaries,  return  by  117 

Kimonos,  excise  tax  on  504 

Knives,  excise  tax  on 467-468 

Knuckles,  metallic,  excise  tax  on  468 

Land  banks  exempt  from  corporate  tax 141 

Leaf  tobacco,  regulations  for  dealing  in  . .429-443 
Leased  wires,  telephone  and  telegraph,  tax  on,  330 
Leasing  motion  picture  films,  excise  tax  on  ..510 
Leave  of  absence  for  internal  revenue  agents 

and  inspectors  . 636 

Lecture  lyceums  exempt  from  special  tax  . . . 529 
Legislative  Drafting  Service  created  ......637 

Lessee  of  motion  picture  films,  when  excise 

tax  payable  by  510 

When  required  to  pay  tax 656-660 

When  required  to  pay  tax  on  theaters,  and 

concert  halls  . 527 

License  required  for  foreign  collections  ....206 

Lien  on  estate  for  tax 319 

Life  insurance  premiums,  _ beneficial,  not 

deductible  from  gross  income  79 

Tax  on  342 

Proceeds  of,  excluded  from  taxation  ...  51 

Life  memberships,  tax  on  454 

Lighting  fixtures,  portable,  excise  tax  on  ...490 
Limitation  of  importation  of  beverage  spirits. 353 
Of  increased  value  following  transfer  ....279 

Of  proceedings  to  collect  tax  189 

Liqueurs,  tax  on  384 

Floor  tax  on  ..386 

Liquor  dealers,  in  prohibition  territory,  special 

tax  on  534 

Lists,  provision  for  672 

Liveries,  excess  tax  on  473 

Living  expenses  not  deductible  from  gross 

income  76 

Lodges  exempt  from  corporate  tax  131 

Lorgnettes,  excise  tax  on  507 

Loss,  how  ascertained  26-30 


PAR. 

Losses  deductible  from  gros«  income 65-67 

Net,  regulations  regarding  32-34 

Deductible,  of  corporatio  ns  152 

Lost  stamps,  replacement  of 664 

Lounging  robes,  tax  on  493 


Manufacture  of  taxed  article  without  payment 

penalized  577-579 

Marine  glasses,  excise  tax  on  507 

Medicinal  preparations,  excise  tax  on  513 

When  exempt  from  excise  tax  513 

Memberships,  club,  tax  on  454 

Men’s  headwear,  excise  tax  on 496-497 

Messages,  telephone  and  telegraph,  tax  on  ..329 

Marine  insurance,  tax  on  343 

Mileage,  prior  purchased 333 

Military  bonus  694-693 

Forces  defined  13 

Letters  to  remain  free 688 

Pay,  when  excluded  from  taxation  59 

Mineral  waters,  artificial,  tax  on  408 

Natural,  tax  on  409 

Mines,  taxable  proportion  of  sale  price  286 

Taxable  selling  price  of  44 

Motion  picture  films,  excise  tax  on  510 

Motorcycles,  excise  tax  on  458 

Municipal  corporations,  bonds,  etc.,  issued  by, 

exempt  from  instrument  tax  574 

Music  boxes,  excise  tax  on  460 

Mutual  associations  exempt  from  corporate 

tax  138-139 

Ditch  and  irrigation  companies  exempt  from 
instrument  tax  574 


Natural  deposits,  depletion  of,  deduction  from 

gross  income  71 

Naval  pay,  when  excluded  from  taxation  . . 59 

Neckwear,  excise  tax  on  499 

Negligence  in  payment  of  taxes,  penalty  for,  186 
Negligent  failure  to  pay  tax  penalty  for  ..646 
Net  income  (see  Income,  net) 

Net  losses  (see  Losses,  net) 

Nightwear,  excise  tax  on  503-504 

Non-alcoholic  beverages,  return  and  payment 

of  tax  410-411 

Tax  on  407-409 

Non-deductible  items  from  gross  income  ..75-79 

Non-paid  service,  transportation  tax  on  334 

Non-resident  alien  (see  Alien,  non-resident) 

Estate  of  304-308 

Estate  of,  domestic  stock  and  insurance  . .309 

Normal  tax,  credits  allowed  on  80-85 

Rates  of  46-42 

Notice  of  alleged  under-statement  in  returns,  123 
To  collector,  by  executors,  of  appointment,  311 


Oaths,  authority  to  administer  669 

Officials  dispensing  drugs,  not  required  to 

register,  or  pay  tax  558 

Federal,  income  of,  made  taxable  49 

Oil  transportation  by  pipe  line,  tax  on  ....  328 

Wells,  taxable  selling  price  of  44 

Opera  glasses,  excise  tax  on  507 

Opium,  tax  on  561 

Organs,  excise  tax  on  460 

Pipe,  exemption  from  excise  tax  460 

Overcollection,  refund  of  652 

Overdue  estates  tax  317 

Owner  unknown,  payment  of  tax  on  income 

of,  at  source  102 

Ownership,  individual,  reorganized  into  cor- 
poration   277 


Packages  for  cigarettes  420 

For  tobacco  422-425 

For  leaf  tobacco  436 

“Paid,”  definition  of  20 

Par  value  defined  254 

Parasols,  excise  tax  on  491 

Parcel  post,  penalty  for  shipment  by,  without 

payment  of  tax  576,  579 

Parlor  car  accommodations,  tax  on  327 

Partners,  distributive  shares  116 

Names  and  addresses  of  116 

Partnership,  reorganized  into  corporation  . .277 

Returns  116 

Shares,  allocation  of  rates  for  38 

Tax  regulations  applying  to  87-92 


97 


PAR. 

Passenger  transportation,  tax  on  326 

Pawnbrokers,  special  tax  on  524 

Payment  of  collections  under  transportation 

tax 340 

Of  expenses  of  suits  665 

Of  floor  tax  644 

Of  taxes 183-193 

Of  tax  on  non-alcoholic  beverages  411 

On  admissions  and  dues  455 

At  source  102-106 

Penalty  for  carrying  on  occupation  without 

payment  of  special  tax  550 

For  delay  in  paying  taxes  190 

For  disclosing  information  670 

For  evasion  of  tax  on  wines  and  spirits  ..396 
For  failing  to  file  returns  or  lists  within 

prescribed  time  675-676 

For  failure  to  affix  document  stamps  595 

For  failure  to  comply  with  provisions  of 

estate  tax  321-322 

For  failure  to  pay  tax  or  supply  informa- 
tion   196 

For  failure  to  print  price  of  admission  on 

ticket  453 

For  foreign  collections  without  license  ....206 

For  fraud  in  tax  payment  187 

For  fraudulent  removal  of  stamps  ....580-584 

For  fraudulent  use  of  stamps  582,  584 

For  increase  of  price  under  pretext  of 

taxation  679 

For  making,  etc.,  instruments,  documents, 

etc.,  without  tax  payment 575-579 

For  manufacture,  importation  or  sale  of 
playing  cards,  package,  or  other  article 

without  tax  payment 577,  579 

For  negligence  in  payment  of  taxes 186 

For  negligent  failure  to  pay  tax  646 

For  non-cancellation  of  stamps  578-579 

For  non-payment  of  excise  tax  483 

For  non-payment  of  tax  on  insurance  ....347 
For  non-payment  of  tax  on  non-alcoholic 

beverages 411 

For  possession  of  washed  or  altered 

stamps 583-584 

For  shipment  by  parcel  post  without  pay- 
ment of  tax  576,  579 

For  tampering  with  cancellation  of 

stamps 582,  584 

Perfume,  tax  on  352 

Permanent  improvements,  cost  of,  not  deduct- 
ible from  gross  income  77 

Person  defined  1 

Personal  custody  of  drugs  563 

Exemption  from  normal  tax  83 

Expenses  not  deductible  from  gross  income  76 

Returns,  time  and  place  of  filing 121 

Service  corporation  defined  19 

Exempt  from  corporate  tax  142 

Stockholders  of,  taxed  as  partners 92 

Philippine  Islands,  collection  of  income  tax 

_ in  208-210 

Photographic  films  and  plates,  excise  tax  on  . .464 

Pianos,  excise  tax  on  460 

Piano  players,  excise  tax  on  460 

Picture  frames,  excise  tax  on  486 

Pipe  line  for  beer,  use  of  405-406 

Definition  of  tax  on  335 

Oil  transportation  by,  tax  on 328 

Pipe  organs,  exempt  from  paving  excise  tax,  460 

Place  of  filing  personal  return  121 

Players,  piano,  excise  tax  on  460 

Playing  cards,  manufacture,  importation  or 

sale  without  tax  payment  penalized,  577,  579 

Stamp  tax  on  606 

Pleasure  clubs  exempt  from  corporate  tax  ..137 

Pocketbooks,  excise  tax  on  489 

Pop,  tax  on 408 

Porto  Rico,  collection  of  income  tax  in  . .208-210 
Possessions  of  United  States,  citizens  of,  in- 
come tax  207 

Of  United  States,  credit  for  taxes  paid  in  . .109 
Postage,  rate  of,  effective  July  1,  1919  ....688 
Post  Office  Department,  sale  of  stamps  ....589 

Powers  of  attorney,  stamp  tax  on  605 

Premiums  on  beneficial  life  insurance  not 

duductible  from  gross  income  79 

Present  war  defined 14 

Pre-war  period  defined  231 


PAR. 

Price  of  admission  to  be  printed  on  ticket.  .453 

Pridr  payment,  credit  for  36 

Purchase  of  mileage  or  ticket 333 

Proceedings  for  violation  of  act  668 

Proclamation  of  President  terminating  war,  15 
Produce,  cash  sales  of,  exempt  from  stamp 

tax  597 

Exchange  sales  of,  stamp  tax  on 596 

Professional  use  of  drugs  563 

Profits,  net,  for  purpose  of  child  labor 

tax  612-617 

Prohibition  territory,  special  tax  on  liquor 

dealers  in  534 

Of  withdrawal  of  distilled  spirits  ..349 

Property,  exchange  of,  determination  of  gain 

or  loss  29 

Provision  for  lists  and  returns  672 

Proxies,  stamp  tax  on  604 

Public  exhibitions,  special  tax  on  529 

Public  records,  returns  to  be  203-204 

Publication  of  statistics  of  operation  205 

Purses,  excise  tax  on  489 

Rate  applied  to  partnerships  89-90 

For  different  years  assigned 35-38 

Of  postage  effective  July  1,  1919  688 

For  1917-18,  when  applied  35 

For  1918-19,  when  applied  37 

For  parts  of  income  for  different  years  ...  39 

For  partnership  shares,  allocation  of  38 

For  surtax  43 

Of  tax  on  estates  *' **’*?fo 

Rebates,  corporate  claim  for  162 

Payments  of,  claim  for  allowance  for  73 

Receipts  for  estates  tax  316 

For  taxes  J9j 

Receivers,  etc.,  returns  by  174 

Recomputation  of  taxes 185 

Records,  excise  tax  on  ...460 

Redetermination  of  deduction  for  amortiza- 
tion   70 

Of  credit  for  taxes  ....112-113 

Of  credit  for  taxes  paid  by  corporation,  171-172 

For  net  losses  33-34 

Of  tax  on  estates  310 

Reduced  tax  on  transportation  systems  127 

Re-enactment,  of  applicable  internal  revenue 

provisions  588 

Refunds  of  taxes  195 

Refund,  not  to  be  made  in  case  of  fraud  ..666 

Of  overcollection  652 

Of  overpayment  . 652 

Reimbursement  for  amount  paid  on  estates 

tax 318 

Religious  corporations  exempt  from  corpo- 
rate tax  134 

Rented  automobiles,  special  tax  on 533 

Reorganization  of  corporations 275-278 

Determination  of  gain  30 

Repayment  of  unauthorized  collection  665 

Replacement  of  lost  stamps  664 

Repeal  provisions 681-684 

Internal  Revenue  Act  572 

To  remain  in  force  for  collection  of  back 

taxes  685 

Reserve  of  insurance  companies  exempt  from 

special  tax 518 

Return  attestation  of  corporate  174 

May  be  made  by  agent 115 

Of  brokers  198 

For  purpose  of  child  labor  tax  622 

By  collector  673 

By  collector,  of  estates  313 

Consolidated,  of  corporations  177-180 

Corporations  174-176 

Time  and  place  for  filing  181-182 

Corporate,  war  and  excess  profits  tax  ....285 
Divided,  required  when  accounting  period 

is  changed  119 

Examination  for,  by  Commissioner  643 

For  excise  tax  482 

By  executors  312 

Extension  of  time  for  674 

Failure  to  file,  within  prescribed  time,  pen- 
alty for 675-676 

By  fiduciary  117 

For  floor  taxes  644 

Individual  114-115 


98 


PAR. 


Return,  For  tax  on  insurance  346 

Of  tax  on  non-alcoholic  beverages  410 

By  non-resident  alien  86 

On  notice  of  Commissioner  642 

Partnership  ; 116 

Personal,  time  and  place  of  filing  121 

Provisions  for  672 

To  be  public  records 203-204 

By  receivers,  etc 174 

Responsibility  of  fiduciary  for  98 

Of  tax  at  source  104-105 

Of  list  of  stockholders  197 

Of  transportation  tax  339 

Under-statement  in  123 

When  they  may  be  witnessed  651 

Riding  academies,  special  on  532 

Roof  gardens,  tax  on  450 

Root  beer,  tax  on  408 

Rugs,  excise  tax  on  485 

Sailors,  estates  of,  when  exempt  from  tax  ..290 

Sale  of  property,  gain  or  loss  in  26-30 

Sales,  cash,  of  produce,  exempt  from  stamp 

tax  597 

Sale  at  retail  by  manufacturer,  etc.,  nature 

of  tax  on  478 

Of  tax  article  without  payment  pen- 
alized   577-579 

Scientific  corporations  exempt  from  corpo- 
rate tax  134 

Season  tickets,  tax  on  449 

Securities,  corporate,  stamp  tax  on  591 

Service,  non-paid,  transportation  tax  on  ....334 
Shares,  distributive,  of  partnerships,  in  com- 
puting income  87 

Shipbrokers,  special  tax  on  525 

Shooting  galleries,  special  tax  on  531 

Shrinkage,  coroorate  claim  for  162 

Single  payment  of  taxes  184 

$6.00  per  barrel  tax  on  beer  371 

Sleeping  car  accommodations,  tax  on  327 

Slot  machines,  excise  tax  on  472 

Smokers’  articles,  excise  tax  on 471 

Smoking  coats,  tax  on  493 

Soda  water,  tax  on  412 

Soft  drinks,  tax  on  408 

Soldiers,  estate  of  when  exempt  from  tax.... 290 
Source,  collection  at,  information  for ....  199-202 

Payment  of  tax  at  102-106 

Tax  at,  return  of 104-105 

Specific  credit  to  corporations  168 

Non-beverage,  wine  for  distillation  of.... 394 

Wine,  definition  of  392 

Return  and  inspection  of 392 

Withdrawal  of  392 

Withdrawal  for  fortification  380 

Sporting  garment,  tax  on  474 

Goods,  tax  on  461 

Stamps-cancellation  of  585 

Commissioner  to  procure  and  regulate  use 

of  586 

Computing  fractional  part  of  a cent 662 

Contracts  for,  limited  587 

Document,  penalty  for  failure  to  affix.... 595 

Difference  in  value  to  be  assessed  655 

Discontinuance  of  368-369 

Fraudently  used,  penalty  for  581,  584 

On  hand  655 

Lost,  replacement  of  664 

Penalty  for  fraudulent  removal 580,  584 

Penalty  for  non-cancellation  578-579 

Penalty  for  possession  of  washed  or  al- 
tered   583,  584 

Penalty  for  tempering  with  cancellation 

of  582,  584 

Rectified  spirits,  exchange  of  367 

Sale  through  Post  Office  Department.  ...  589 
To  be  furnished  to  assistant  treasurers  and 

depositories  590 

Tax  on  exchange  sales  of  produce  596 

States,  bonds,  etc.,  issued  by,  exempt  from 

instrument  tax  574 

Statistics  of  operation  of  law  to  be  pub- 
lished   205 

Still  wines,  tax  on  375-379 

Stock  dividends  considered  income  23 

How  taxed  24 


PAR. 


Stock,  domestic,  held  by  non-resident  deced- 
ent, part  of  gross  estate  309 

Capital,  issue  of,  stamp  tax  on  593-594 

Transfer  of,  stamp  tax  on  595 

Stockholders  of  holding,  or  accumulating 

companies  made  taxable  101 

Return  of  list  of  197 

Stockings,  excise  tax  on  500-501 

Street  fair,  special  tax  529 

Suit,  payment  of  expenses  of  665 

Sun  shades,  excise  tax  on  491 

Surety  bonds,  stamp  tax  on  592 

Sureties,  bonds  of  United  States  acceptable 

in  lieu  of  .680 

Surgical  instruments,  exempt  from  excise 

tax  507 

Rates  for  43 

Tangible  property  defined  251 

Table  water,  tax  on  409 

Tax,  income,  war  profits  and  excess  profits, 

not  deductible  from  gross  income 64 

Deductible  from  gross  income  64 

On  admissions  and  dues,  collection  and 

payment  455 

Exemptions  from  451 

On  excess  rates  charged  for  admission. 447-448 

Board,  Advisory  631-635 

On  powers  of  attorney  605 

On  rented  automobiles  533 

Paid  on  boat,  credit  for  548-549 

On  bowling  alleys  and  billiard  rooms.... 530 

On  brokers  523 

On  customhouse  brokers  526 

On  shipbrokers  525 

On  cameras  463 

On  candy  465 

On  issue  of  capital  stock  593-594 

On  transfer  of  capital  stock 595 

On  carbonated  waters  408 

On  carpets  485 

Certificates  of  indebtedness.  United  States, 

receivable  for  663 

On  champagne,  sparkling  wines,  liqueurs, 

etc 381-385 

On  chewing  gum  462 

On  child  labor  611 

On  cigars  414-415 

On  cigarettes  416 

On  cigarette  paper  427-428 

On  circuses  528 

On  club  membership  454 

On  corporations  124-126 

Corporation,  adjustment  of  280-284 

Special,  on  domestic  corporation  516 

On  corporations,  exceptions  to  128-142 

Paid,  credit  to  corporations  167 

Payment  on  credit  sales  653 

On  custom  house  operations  601-602 

Normal,  credits  allowed  on  80-85 

Normal,  rates  of  40-42 

Stamp,  on  deeds  of  conveyance  600 

Stamp,  on  drafts  and  check  598 

On  portable  electric  fans  469 

Estates,  when  due  314 

Excise,  penalty  for  non-payment  of  483 

Excise,  returns  for  482 

On  express  shipments  325 

On  firearms  466 

On  foreign  passage  tickets  603 

On  freight  324 

On  ice  cream  and  soda  water  412 

On  insurance 341-345 

Special,  reserve  of  insurance  companies 

exempt  from  .. 518 

Stamp,  on  insurance  transactions  . .. 609 

On  jewelry  and  precious  metal  fittings.  ..  .507 
On  leasing  and  licensing  motion  picture 

films  510 

When  lessee  or  vendee  shall  pay  ....656-660 

On  life  memberships  454 

On  portable  lighting  fixtures  490 

On  liquor  dealers  in  prohibition  territory. . 534 

On  medicinal  preparations  513 

On  artificial  mineral  waters  408 

On  natural  mineral  waters  409 

On  nightwear  and  underwear  503-504 

On  objects  of  art. .••••; 481 

On  oil  transportation  by  pipe  line  328 


99 


PAR. 


PAR. 


Tax  On  opium,  coca  leaves,  etc 561 

On  parcel  post  packages  607-608 

On  passenger  transportation  326 

On  pawnbrokers  524 

Payment  of  183-193 

By  beneficiary  99 

Payment  of  by  executors  315 

By  fiduciary  99 

Of  at  source  102-106,  169 

On  photographic  films  and  plates 464 

On  players,  player-pianos,  talking  machines, 

etc 460 

Proceedings  against  absconding  or  conceal- 
ment   193 

On  proxies  604 

On  public  exhibitions  529 

On  purses,  pocket  books  and  handbags ....  489 

Tax  rates  for  estates  and  trusts  93-98 

Rate  of,  on  estate  289 

Receipt  for  194 

On  rectified  distilled  spirits  and  wines.... 360 

Floor,  on  rectified  spirits  and  wines 361 

Redetermination  of  credit  for 112-113 

Refunds  of  . 195 

Regulations  applying  to  partnerships. ... 87-92 

On  riding  academies  532 

On  sleeping  car  accommodations  327 

At  source,  when  paid  by  recipient  106 

At  source,  return  of  104-105 

Special,  exceptions  to  529 

On  foreign  corporation  517 

Payment  of,  not  an  exemption  from 

penalty  or  punishment  535 

On  theatres  and  concert  halls,  when 

lessee  pays  527 

On  manufacturers  of  tobacco,  cigars  and 

cigarette  537-543 

On  sporting  goods  461 

On  still  wine  375-379 

On  street  fairs  529 

On  table  waters  409 

On  tax  guaranteed  investments  103 

On  telegraph  and  telephone  leased  wires.. 330 

On  telephone  and  telephone  messages 329 

On  theaters  and  concert  halls  527 

On  tobacco  and  snuff  421 

Transportation,  collection  of  336-338 

On  non-paid  pipe  line  transportation 335 

On  non-paid  transportation  service 334 

Transportation,  paid  by  person  served  . ...332 
Transportation,  payment  of  collections 

under  340 

Transportation,  returns  of  339 

On  trunks  

On  umbrellas,  parasols  and  sun  shades.  ..  .491 

In  Virgin  Islands  640 

On  waist  coats 494 

Selling  price  of  mines,  c:1  and  gas  wells..  44 

Talking  machines,  excess  tax  on 460 

Telegraph  messages,  tax  on  329 

Service,  Governmental,  exempt  from  tax.. 331 

Wires,  leased,  tax  on  330 

Telephone  messages,  tax  on  329 

Service,  Governmental,  exempt  from  tax... 331 

Wires,  leased,  tax  on  330 

Termination  of  war,  how  fixed  15 

Territories.  Bonds,  etc.,  issued  by,  exempt 

from  instrument  tax  574 

Theaters,  special  tax  on  527 

Thermos  appliances,  excise  tax  on  470 

Three  cent  postage,  repeal  effective  July  1, 

1919  688 

Tickets,  prior  purchased  333 

Foreign  passage,  stamp  tax  on  603 

Time  of  filing  personal  return  121 

Tobacco,  floor  tax  on  426 

Manufactures  of,  special  tax  on 538-539 

Toilet  articles,  excise  tax  on  512 

Transfer,  limitation  of  value  following  279 

Transferees  of  estates,  liable  for  tax 320 

Transportation  tax,  collection  of 336-338 

For  hire,  tax  on  334 

Pipe-line,  non-paid,  tax  on  335 

Systems,  reduced  tax  on  127 

Tax  paid  by  person  served  332 

Trucks,  automobile,  excise  tax  on  457 

Trunks,  excise  tax  on  487 

Trusts  tax.  regulations  for  93-100 

Tax  on  corporations  in  1918  125 


Twelve  per  cent,  gross  normal  tax,  1918...  41 
Two  per  cent  tax  on  tax  guaranteed  invest- 


ments   103 

$2.20  tax  on  distilled  spirits  in  bond 348 

Umbrellas,  excise  tax  on  491 

Unauthorized  collections,  repayment  of 665 

Underwear,  excise  tax  on  503-504 

United  States  bonds  acceptable  in  lieu  of 

sureties  680 

Certain  indemnity  bonds  to  exempt  from 

instrument  tax  574 

Bonds,  etc.,  issued  by  exempt  from  instru- 
ment tax  574 

Possessions,  citizens  of,  income  tax 207 

Possesion  of,  credit  for  taxes  paid  in 109 

Unknown  owner,  payment  of  tax  on  income 

of  at  source  102 

Utilities,  government  directed,  income  of 

when  excluded  from  taxation  58 

Value,  increase  of,  following  transfer,  limi- 
tation of  279 

Valuation  of  gross  estates  291-297 

Vendee,  when  required  to  pay  tax 659-660 

Violations  of  act,  proceedings  in  668 

Virgin  Islands,  taxes  in  640 

Volume  of  rectified  spirits  and  wines  not 

to  be  increased  362 


Waistcoats,  excise  tax  on  494 

War  finance  securities  excluded  from  taxa- 
tion   54 

War  profits,  corporation,  tax  on  212-223 

Tax  not  deductible  from  gross  income.  . 64 

Tax  on,  credits  232-242 

Tax,  limitation  on  225 

Tax,  net  income  245-249 

War,  termination  of,  how  fixed  15 

Work,  corporations  doing,  to  make  separate 

returns  177 

Warehousing,  temporary,  of  distilled  spirits 

without  stamps  355 

Watches,  excise  tax  on  507 

Waters,  table,  tax  on  409 

Wells,  taxable  proportion  of  sale  price 286 

Whisky,  straight,  when  not  subject  to  tax  on 

rectified  spirits  363 

Wholesale  liquor  dealers  stamps,  exchange 

of  367 

Wilful  failure  to  pay  tax,  penalty  for ....  647-048 
Refusal  to  pay  tax  or  furnish  information, 

penalty  for  196 

Wine,  addition  of  must  to  391 

Of  sugar  to  391 

Allowance  for  loss  398 

Artificially  carbonated,  tax  on 383 

Blended,  when  not  subject  to  tax  on  recti- 
fied wines  363 

Blending  of 396 

Use  of  for  distillation  of  non-beverage 

spirits  394 

For  distillation,  removal  of  393 

Penalty  for  evasion  of  tax  on  396 

Family,  exempt  from  tax  388 

Fortification  of  396 

Natural — definition  of 374 

Possession  of,  inventory  and  bond  re- 
quired   388 

Rectified — tax  on  360 

Floor  tax  on  361 

Retail  dealers  exempt  from  inventory  and 

bond  388 

Sparkling,  floor  tax  on  386 

Spirits,  see  Spirits,  wine. 

Still,  tax  on  375-379 

Floor  tax  on  386 


And  sparkling,  etc.,  tax  on  may  be  by 


assessment  395 

Sweet,  floor  tax  on  387 

Fortification  of  390-392 

Withdrawal  of  beer  for  bottling  405-406 

Of  wine  spirits  392 

Spirits  for  fortification  380 

Withholding  agent,  definition  of  18 

Witnessing  returns,  when  it  may  be  affected. 651 

Women’s  headwear,  excise  tax  on  495 

Workmen’s  compensation  acts,  receipts  under, 

excluded  from  taxation  56 


100 


